USD/JPY Forex Signal - 26 December 2018

Last Monday’s signals were not triggered, as there was no bullish price action at any of the several support levels which were reached and broken.

Today’s USD/JPY Signals

Risk 0.75%.

Trades may only be entered between 8am New York time and 5pm Tokyo time today.

Short Trades

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 110.68 or 110.89.
  • Place the stop loss 1 pip above the local swing high.
  • 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 ride.

Long Trade

  • Long entry following a bullish price action reversal on the H1 time frame  immediately upon the next touch of 110.04.
  • 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 ride.

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 Monday that although the picture was bearish, cluster of support levels between 110.49 and 110.89 and of course the 110.00 area was likely to be hard to break and should hold for some time. I expected that the price would just gently consolidate between 110.89 and 111.46. I was wrong, the strong fall by the U.S. stock market into bear market territory acted as a driver to send more money flowing into safe haven asset such as the Japanese Yen.

The picture is now bearish, and more bearish technically than it was. It is notable that several of the support levels were broken, but it is also significant that 110.00 has held so far. Much is likely to now depend upon whether the U.S. stock market sells off again when it opens later. If so, there could be a further sharp fall here. I am generally bearish, and I would take a bearish bias if we get any rejections of the new resistance levels nearby after New York opens.

USDJPY

There is nothing important due today concerning the USD. At 4am London time, the Governor of the Bank of Japan will be giving a minor speech.

Adam is a Forex trader who has worked within financial markets for over 12 years, including 6 years with Merrill Lynch. He is certified in Fund Management and Investment Management by the U.K. Chartered Institute for Securities & Investment. Learn more from Adam in his free lessons at FX Academy.