Yesterday’s signals were not triggered, although the low of the day and the origin of a strong upwards directional movement began just a pip or two above the support level identified at 112.94.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be entered between 8am New York time and 5pm Tokyo time, during the next 24-hour period.
Short Trade
- Short entry following a bearish price action reversal on the 1H1 time frame H1H1H1 time frame immediately upon the next touch of 112.83.
- 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 Trades
- Long entry following a bullish price action reversal on the 1H1 time frame H1H1H1 time frame immediately upon the next touch of 112.36, 111.94 or 111.66.
- 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 yesterday that as long as stock markets remain fearful, the Yen should tend to strengthen, so this pair effectively becomes a proxy for major stock markets. If markets remained fearful after the New York open, the price could easily fall to 111.94 or possibly even lower. This was accurate: markets did remain fearful, falling after New York opened, sending the price down to just a pip or two above the 111.94 level which I had thought could be hit, before stocks recovered quite strongly, with this pair recovering with it by proxy. So, I was right to see this paid taking its lead from U.S. stocks.
This pair is in a very slight long-term bullish trend, but it is weak. There is also a medium-term bullish price channel which can be seen in the price chart below. I expect this pair will continue to be driven by the U.S. stock market, but the most logical opportunity would now look to be a long trade entry from 112.36. I still am reluctant to take any definite directional bias in this tight, range-bound market environment.
There is nothing important due today concerning either the JPY or the USD.