Yesterday’s signals may have triggered a long trade following the bullish rejection of the support level at 113.71. I do not like the way this trade is developing as there is low volatility and momentum, so it would probably be wise to exit this trade before it turns into a loss.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be taken from 8am New York time to 5pm Tokyo time, over the next 24-hour period only.
Short Trade 1
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 114.50.
Put the stop loss 1 pip above the local swing high.
Move the stop loss to break even once the trade is 20 pips in profit.
Take off 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to ride.
Long Trades
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 113.53, 113.41, or 113.29.
Place the stop loss 1 pip below the local swing low.
Adjust the stop loss to break even once the trade is 20 pips in profit.
Remove 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to run.
The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.
USD/JPY Analysis
This pair continues to look interesting. There is a long-term bullish trend, and the price is also clearly contained within a medium-term bullish symmetrical channel, which is shown in the chart below. While the price is finding it very difficult to break up above the very long-term resistance at about 114.50, there is strong buying below 113.75 or so. Taken together, these facts indicate that the price is at a pivotal area which has a positive probability to provide a low risk, high reward winning trade either long or short.
Yesterday, I had thought the eventual outcome would be a bullish breakout above 114.50, but as time goes on without this happening, a bearish breakdown is becoming more likely. As today is now the third day of the trading week, a decisive move is becoming more likely one way or the other. There will probably be a lot of stop loss orders below 113.50 and 113.25, so a breakdown could be sudden and dramatically strong, and might even then reverse into a strong bullish bounce. These kind of moves often happen in this type of market.
There is nothing important due today concerning the JPY. Regarding the USD, there will be a release of Crude Oil Inventories at 3:30pm London time.