Yesterday’s signals were not triggered, as there was no bullish price action at 109.15.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be taken between 8am New York time and 5pm Tokyo time, during the next 24-hour period.
Short Trade
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 109.13.
Place 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.
Remove 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to run.
Long Trade
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 108.05.
Place the stop loss 1 pip below the local swing low.
Move 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
I wrote yesterday that it was probably best to avoid making any calls for another 24 hours or so – this was just as well as I was looking for a bounce-back rise after last week’s fairly strong counter-trend fall. However, the price sat heavily on the support at 109.15 and has finally broken down well below that level, heading towards 108.05. The Yen is strong because risk appetite has become seriously rattled by the Italian debt crisis and its impact on the Euro, with both the U.S. Dollar and Japanese Yen rising strongly against the Euro and currencies which are linked to it such as the British Pound and Swedish Kroner. Stock markets are also falling too. Such movements tend to be short-lived, so we may already have seen the strongest part of today’s movement. If the sense of crisis persists, then we can expect further downwards movement, though the Yen will probably rise much faster against other currencies, meaning this pair will be a sideshow.
I have no directional bias today, seeing both nearby levels as equally good potential opportunities for fade trades.
Regarding the USD, there will be a release of CB Consumer Confidence data at 3pm London time. Concerning the JPY, the Governor of the Bank of Japan will be speaking at 1am.