USD/JPY Forex Signal - 7 August 2019

|

USDJPY: Resistance at 106.73 holding

Yesterday’s signals were not triggered, as there was insufficiently bullish price action at 106.17.

Today’s USD/JPY Signals

Risk 0.75%.

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

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.

Advertisement
Great trade opportunities are waiting - don't wait to profit from this pair!
TRADE NOW

USD/JPY Analysis

I wrote yesterday that it looked as if we had seen long-term selling of the Japanese Yen, perhaps by the Bank of Japan, who had expressed a willingness to stop the Yen strengthening further, which is usually quite easy for a central bank to do as they can simply increase supply to more than match the market’s demand in all but the most unusual circumstances.

Although sentiment was still relatively “risk-off”, this pair was in a strange position, and it seemed wise to avoid trading here for at least a day.

This was a reasonably good call as although the resistance at 106.73 has held, the Yen has not strengthened much, and the price action is not really bearish. This comes at a time when there is a flight into safety as represented by precious metals and the overall market environment should really be strengthening the Yen. We have also seen the invalidation of any nearby support, so the overall situation remains confusing and unpredictable.

The best course of action to take here now is likely to be waiting to see whether the resistance level holds at 106.73. The longer this level survives, the more bearish the outlook will become.USDJPYThere is nothing of high importance due today concerning either the JPY or the USD.

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.