USD/JPY Forex Signal

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USDJPY: Extremely bearish on flight to safety

Last Thursday’s signals were not triggered, as there was no bearish price action at either 109.00 or 108.70 when they were reached.

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 Trade Ideas

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 106.73 or 107.21.

  • 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.

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 the outlook was certainly more bullish, the problem here was that the JPY was relatively strong, so the price did not seem to be able to make strong bullish progress.

Nevertheless, I was ready to take a cautiously bullish bias if there was a firm bullish bounce at any of the support levels nearby. Luckily, there was no such bounce, and the price has simply made a huge downwards movement ever since, falling to new 8-month low prices, after President Trump imposed more tariffs on Chinese goods, to which the Chinese government announced retaliatory measures. This has created a strongly risk-off market environment and the Yen, more than any other safe-haven asset, is the greatest beneficiary. The Japanese Yen is simply the strongest of all the major currencies right now.

Technically, the price may be bottoming out now near 106.00 and I had seen this area as probably support. However, I just cannot see any long trade opportunity here now, so I am simply ignoring this level, which seems to have become technically invalidated anyway. Below 106.00 the price has a great deal of room to fall – this is a “price vacuum” so the price could fall by another 200 pips soon quite easily, which could be a very exciting short trade opportunity.

I would take a bearish bias on this currency pair, which is now at the heart of the Forex market, if the price can make an hourly close below today’s low at 9am New York time today.USDJPYThere is nothing of high importance 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.