USD/JPY Forex Signal

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USDJPY: very bearish below 108.34

Last Thursday’s signals were not triggered as the bearish price action took place above the resistance level at 109.81.

Today’s USD/JPY Signals

Risk 0.75%.

Trades may only be entered between 8am New York time Monday and 5pm Tokyo time Tuesday.

Short Trades

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 108.73 or 109.07.

  • Place 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 107.50.

  • Place 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 last Thursday that there was no long-term trend here, and this pair had been difficult to trade, but it seemed that if the price could get established above the next two resistance levels (i.e. above 110.11), it would be a bullish sign, so I would take a bullish bias later if that happens.

This was an OK call as the price never did get above 110.11 so it was OK to use that as a mark for judging whether this pair was in a bullish situation, as the price turned very bearish later that day and began a move down that played out with unusually high volatility – Friday’s daily range was more than twice the average true range of the past 15 days. Such strong bearish moves usually follow through, and the price at the time of writing is still below last week’s close but not by much. If the price keeps failing to break above the lowest resistance level at 108.34 it should make lower prices still – this is almost certainly going to be today’s pivotal point and I would take a bearish bias if we get a strong bearish rejection of either 108.34 or 108.73.USDJPYThere 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.

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.