USD/JPY Forex Signal

Last Thursday’s signals produced a profitable short trade following the bearish price action at the resistance level of 108.12 following the break down after an inside candlestick. This trade gave about 30 pips of profit.

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 108.70 or 109.50.

  • 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 106.02.

  • 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 Thursday that we had seen quite a strong recovery from the lows, and the price would need some time to settle before the next move began to reveal itself. I saw 108.12 as the key pivotal level. This was a good call over the short-term, however the level was quickly invalidated, and the bullish break above it seems to have run out of steam. I was right to predict the price would need some time to settle and it seems we have had that time. The price now seems to be consolidating below the next resistance level of 108.70, where it has completely run out of momentum and if hardly moving. If the resistance at 108.70 continues to hold over the coming hours, a move down will become increasingly likely, and conversely a break above it would be a mildly bullish sign, so 108.70 looks like today’s pivotal level. I would be bearish later if the price tests the level and reacts in a firmly bearish way.USDJPYThere is nothing of high importance due today concerning the JPY. Regarding the USD, there will be a release of ISM Non-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.