USD/JPY Forex Signal - 31 January 2019

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Yesterday’s signals were not triggered, as there was no appropriate price action at any of the key levels.

Today’s USD/JPY Signals

Risk 0.75%.

Trades may only be taken from 8am New York time until 5pm Tokyo time today.

Short Trades

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 108.73 or 109.15.
  • Put 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 108.34.
  • Put 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 yesterday that ranging conditions were still prevailing in this pair, but the major FOMC release due later was likely to produce a breakout from this range. I suspected that a downwards movement would carry further than an upwards one.

This was a good call as levels were not reliable, and when the FOMC release was made it pushed the price down. Interestingly, even though the U.S. Dollar now seems to be gaining some ground against most other currencies, the Yen is being bought with some momentum although nothing very special. This suggests we may see the price reach the support at 108.34, which is an important level as there are no key support levels below that for more than 200 pips. A strong break below 108.34 is relatively unlikely, but could trigger a sharp fall, especially if the U.S. stock market sells off. For this reason, I would have a bearish bias if we got a firm break and hold below 108.34 during the New York session today.

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There is nothing of high importance due today regarding either the JPY or the USD.

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.