USD/JPY Forex Signal - 3 January 2019

Yesterday’s signals were not triggered, as there was no bullish price action at 108.05.

Today’s USD/JPY Signals

Risk 0.75%.

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

Short Trades

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 108.12 or 109.50.

  • 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

  • Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 106.02.

  • 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 the pivotal level would be 109.07, and I was ready to take a bearish bias below it. When New York opened, the price has risen above that level quite strongly from the earlier low, but towards the end of the New York session the price got back below it, before it fell very sharply, so essentially my forecast yesterday was a good call. In a “flash crash” aided by low liquidity due to Japan still being on holiday, the Japanese Yen strengthened dramatically in the current “risk off” environment, perhaps triggered by Apple’s disappointing report. The old trading maxim that accidents happen along the line of least resistance is very applicable here. The price at one stage was briefly quoted even lower than 105.00.

We have seen quite a strong recovery from the lows, and the price will need some time to settle before the next move begins to reveal itself. The best that can be said right now is that the nearest resistance is at 108.12 and a break above that level would be a bullish sign, while a consolidation below it would suggest that the price will prepare to make another downwards movement. However, such a move probably won’t happen over the next day.USDJPY

There is nothing of high importance due today concerning the JPY. Regarding the USD, there will be a release of ISM Manufacturing PMI data at 3pm London time.

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.