USD/JPY Forex Signal

Yesterday’s signals were not triggered as the price action rejecting the resistance level at 112.00 was not appropriate trigger an entry, although this resistance held effectively.

Today’s USD/JPY Signals

Risk 0.75%.

Trades must be entered between 8am New York time Wednesday and 5pm Tokyo time Thursday.

Short Trades

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 112.00 or 112.10.
  • 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 Trades

  • Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 111.70, 111.58 or 111.23.
  • 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.

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USD/JPY Analysis

Yesterday I wrote that the picture had become somewhat less bullish, but I still saw a sustained break above 112.10 as a significant bullish sign, if it happened. The supportive area at 111.58 plus the trend line near there looked attractive as a potential entry point for a long trade.

This was a reasonably good call. The resistance at 112.00 held and the nearest support at 111.58 was never reached. The price action established a new higher support level at 111.70 which is now confluent with the medium-term supportive trend line, so I see that level as likely to be pivotal today. I would be prepared to take a long bias following a strongly bullish rejection of 111.70or a sustained break above 112.10. I think bears will find it harder to push the price down even if 111.70 breaks down due to the support at 111.58, but if the price stays below 111.58 that would be a bearish sign and should trigger a stronger fall.

It is quite likely nothing will happen until the Bank of Japan’s policy guidance due later.

usdjpy

There is nothing important due today concerning the USD. Regarding the JPY, there will be a release of the Bank of Japan’s Outlook and Monetary Policy Reports, followed by the usual press conference, during the second half of the Asian session.

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.