USDJPY: Bearish break below 107.00
Yesterday’s signals were not triggered as none of the key levels were ever reached.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be entered from 8am New York time Tuesday until 5pm Tokyo time Wednesday.
Short Trades
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of the short-term bearish trend line currently sitting at about 107.40, 107.90 or 108.16.
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
Go long following a bearish 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 yesterday that the picture was still bearish as we were getting a classic consolidation pattern with both a higher swing low and a lower swing high. I thought that it would be prudent to wait for a bearish failure to break above 107.90 for a high-probability short entry – I was ready to take a bearish bias if that situation arose later in the day.
I was correct to see a bearish direction, but we never got the pullback to 107.90 which I was anticipating.
The U.S. Dollar was hit quite hard over the past day, with the money flow especially strong in the direction of safe havens such as Gold, the Swiss Franc, the Japanese Yen etc. This pushed the price down and although the move is not especially strong, it makes sense to take a bearish bias here, especially if the price can stay below the short-term bearish trend line which can be seen in the price chart below. I will take a bearish bias if we get a strong failure at any of the resistance points I identify here.
There is nothing of high importance due today regarding the JPY. Concerning the USD, there will be a release of CB Consumer Confidence data at 3pm London time, followed by a speech on monetary policy from the Chair of the Federal Reserve at 6pm.