USD/JPY Forex Signal

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USDJPY: Bulls trying to break & pop above 107.50

Yesterday’s signals were not triggered, as there was insufficiently bearish price action at 107.36.

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 107.90 or 108.16.

  • 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 Trades

  • Long entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 107.36 or 107.11.

  • 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 it made sense to take a bearish bias here, especially if the price could stay below the short-term bearish trend line at about 107.40. I was ready to take a bearish bias if we got a strong failure at any of the resistance levels. This call had some merit as the trend line held and gave about 20 short pips when it was first reached, but the action wasn’t really bearish as the stairstep broken support at 107.11 continued to hold up the price. The price then broke up above the trend line and established new higher support at 107.36. It is currently moving up from there with strong short-term momentum, popping up above the psychological level of 107.50.

This presents a more bullish picture, despite the long-term bearish trend. It may take a while, but the price looks likely to reach 107.90 today, where it might then make a bearish reversal. This could be a good short trade if the bearish rejection is strong and I would take a bearish bias later if we get this trade set-up here.USDJPYConcerning the USD, there will be a release of Core Durable Goods Orders data at 1:30pm London time. There is nothing of high importance today regarding the JPY.

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.