Yesterday’s signals produced a profitable long trade from 111.23 and a profitable short trade from 111.53, with both support and resistance levels holding so far.
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 111.69, 111.90, 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 111.23 or 110.88.
- 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 the picture certainly had come to look more bearish as we had seen a move down invalidating some support and printing new lower resistance. However, the only truly concrete thing that I had to say was that the support level at 110.88 was likely to be very strong if reached.
This was a fairly good call as resistance has continued to hold, but so has support.
Later today we will get the monthly FOMC release and this pair is usually very sensitive to it. Barring any major surprises, it is quite likely we will see spikes and reversals following the release – I still think a fast spike down to 110.88 and a buy limit order there could be an interesting and successful trade. In the absence of a true long-term trend, I have no directional bias, I just see 110.88 as likely to be strong support which will hold. A sustained break below it would be a very bearish sign.
There is nothing important due today concerning the JPY. Regarding the USD, there will be a release of ISM Manufacturing PMI data at 3pm London time, followed by the FOMC Statement and Federal Funds Rate at 7pm and the press conference half an hour later.