USD/JPY Signal Update
Yesterday’s signals were not triggered and expired.
Today’s USD/JPY Signal
Risk 0.50%.
Entry must be made before 5pm London time today.
Short Trade
Take a short trade after a next bar break of any bearish pin or engulfing hourly candle that occurs following a first touch of 102.79. After one hour following the close of the first hourly candle that closes above 102.79, the trade should not be taken.
Put a stop loss 1 pip above the local swing high.
Move the stop loss to break even when the price returns to retest the bearish trend line shown in the chart below. Take off 75% of the position as profit at this trend line, and leave the remaining 25% to ride.
USD/JPY Analysis
Yesterday’s analysis worked out pretty well: the highlight being “Looking at the smaller picture, it seems that the key levels to watch are the support at 101.20 and the descending trend line acting as resistance which is now at about 102.50 which is also a key psychological level.” We have not had a break of either of these levels and in fact 102.50 and the bearish trend line close to there have acted as resistance, despite the strong move up following yesterday’s FOMC statement.
Although the trend line is clearly acting as resistance this morning, the resistance above there at 102.79 should be more important. A pin bar that tested both of them would be excellent.
If we do get a break above this trend line and then a bearish bounce off 102.79, be very careful if we get back to a retest of the trend line, as this could be the start of a strong second wave of a bullish move which would then go on to take out the 102.79 level.
A candlestick analysis of the higher time frames shows a mixed picture. It looks like the near future will probably see consolidation, unless we get a strong break above 102.79 which could see things turning decidedly bullish again.
There are no high-impact economic data releases concerning the JPY due today, and in fact there will be no real Tokyo session tonight as it is a public holiday in Japan tomorrow. There are important announcements later today that concern the USD. At 12:30pm London time there is Unemployment Claims and at 2pm there are Existing Home Sales and the Philly Fed Manufacturing Index.