USD/JPY Forex Signal

Yesterday’s signals produced a profitable short trade from the bearish engulfing candlestick structure which rejected the resistance level at 109.50. However, it gave little profit and looks like it won’t give any more, so anything left in this position is probably best exited immediately.

Today’s USD/JPY Signals

Risk 0.75%.

Trades must be entered from 8am New York time to 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 109.50 or 110.04.

  • Place 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

  • Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 109.15, or 108.73.

  • Place 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 ranging conditions were still prevailing in this pair, so I would still take an approach of trading strong bounces off key levels in any direction. This was a good call as both of the nearest key levels have held and continue to contain the price.

There is a major FOMC release due later today which is likely to produce a breakout from this range. I suspect that a downwards movement would carry further than an upwards one as the stock market which is highly correlated with this currency pair remains in a bear market.

It is probably wise to stand aside from this pair until after the FOMC release, although quick scalps from the key levels on short-term time frames could be possible.USDJPYThere is nothing of high importance due today regarding the JPY. Concerning the USD, there will be a release of the FOMC Statement and Federal Funds Rate at 7pm London time, followed by the FOMC Press Conference half an hour later.

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.