USD/JPY Forex Signal

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USDJPY: Ranging as 108.20 holds

Yesterday’s signals may have produced a long trade from the very large, bullish outside candlestick which rejected the support level at 108.20. This trade is still open and may eventually turn into profit, but it could take a long time. It might be wise to be prepared to take a partial loss if in this long trade, as the major releases due later for both currencies is likely to produce volatile price movement.

Today’s USD/JPY Signals

Risk 0.75%.

Trades may only be taken between 8am New York time Wednesday and 5pm Tokyo time Thursday.

Short Trades

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 108.75 or 109.07.

  • Put 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 Trade

  • Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 108.20.

  • Put 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.

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USD/JPY Analysis

I wrote yesterday that we were seeing the support at 108.20 hold so far and it was quite possible that the price would move up from here. It was clear that 108.20 would be the day’s pivotal point. This was a correct call.

There is no change to the technical picture really: the price continues its narrow consolidation between 108.20 and 108.75. This is not surprising as we will later today get central bank input for both currencies, and this is likely to produce a breakout from this range. In which direction is anyone’s guess, so it is probably better to stand aside until after the releases and hope things become clearer.USDJPYConcerning the USD, there will be releases of the FOMC Economic Projections, FOMC Statement, and Federal Funds Rate at 7pm London time, followed half an hour later by the usual press conference. Regarding the JPY, there will be a release of the Bank of Japan’s Monetary Policy Statement late in the Asian session, also followed later by a press conference.

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.