USD/JPY Forex Signal - 8 May 2019

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Yesterday’s signals were not triggered, as there was no bullish price action at 110.25.

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 110.29 or 110.88.
  • 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 Trade

  • Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 109.59 or 1.0915.
  • 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

I wrote yesterday that the picture remained essentially bearish and the support at 110.25 and the major level at 110.00 below that were very important long-term support – a sustained break below 110.00 would be a very bearish sign and a strong move down is looking quite possible. I was ready to take a bearish bias if the price could trade below 110.25 for a couple of hours later.

This was a fairly good call as the price did fall further over the day, trading below 110.25 but recovering most of its value since that break was made.

The risk-off sentiment due to the trade dispute over tariffs continues, which is strengthening safe haven currencies such as the Japanese Yen. The price is now at a key technical point – this area just below the psychological level at 110.00 has been long-term support and resistance. It is also the area of a 50-day low, so the Japanese Yen stands on the brink of establishing a long-term trend against the U.S. Dollar. We also see an increase in volatility in this currency pair, and it is certainly at the centre of the market’s focus right now.

 I would take a bearish bias if we get an hourly close later below 110.00, or if there is a bearish rejection at a test of the resistance at 110.29.

usdjpy

There is nothing important due today concerning either the JPY or the USD.

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.