Last Thursday’s signals were not triggered, as the bearish price action took place just above the resistance level identified at 112.57.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be entered between 8am New York time and 5pm Tokyo time, over the next 24-hour period only.
Short Trade
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 113.13.
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 run.
Long Trade
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 112.41.
Put 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.
Take off 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 last Thursday that I would have a bearish bias if the price broke convincingly below the lower trend line of the channel shown in the price chart below. A strong bearish reversal off 112.57 should also be a great short trade entry if it happened due to the confluence there of a trend line, resistance level, and the psychological importance of 112.50.
The lower trend line of the price channel held, so the first scenario did not occur, and then the price made a bearish reversal just a couple of pips above the resistance I had identified at 112.57. However, this reversal did not hold, and the price continued to rise, which I thought was surprising. This was a bullish sign as when an obviously bearish scenario does not play out as expected, this is usually a good signal of the opposite.
The price has continued to advance, and the long-term bullish price channel remains intact. However, there are short-term signs that the move up has run out of steam just below the round number at 113.00. I remain essentially bullish above 112.41, but we may well need a retracement before another good opportunity entry presents itself. Therefore, I have no short-term directional bias now. A break above the resistance at 113.13 would be a very bullish sign.
There is nothing important due today concerning the JPY. Regarding the USD, there will be a release of CB Consumer Confidence data at 3pm London time.