USD/JPY Forex Signal

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USDJPY: Bearish consolidation under 108.51

Yesterday’s signals were not triggered as the price never quite reached the resistance level at 108.51.

Today’s USD/JPY Signals

Risk 0.75%.

Trades must be taken from 8am New York time Thursday until 5pm Tokyo time Friday.

Short Trades

Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 108.51, 108.73, or109.07.

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 107.50.

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 looked considerably less bearish as the price did not seem to want to remain below 108.00 and looked as if it were making a significant bottom. Stock market sentiment is also increasingly positive, and this tends to drive up the price of USD/JPY. However, despite this slight bullishness, there were strong resistance levels nearby which may hold down the price, so I would take a bearish bias at a strong bearish turn at any of the three nearby resistance levels.

None of the levels were reached, and the price made a high just below the nearest resistance level at 108.51, so there is residual bearishness and a long-term bearish trend. However, we have seen several days of consolidation, so a bullish reversal after a bullish break above 108.51 is becoming increasingly likely.

I would still take a bearish bias if there is a strong bearish rejection of 108.51 following another retest of that level.USDJPYThere is nothing important due today concerning the USD. Regarding the JPY, there will be a minor speech by the Governor of the Bank of Japan at 9:25am 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.