USD/JPY Forex Signals - 21 August 2019

USDJPY: Price cannot get above 106.73

Yesterday’s signals may have produced a long trade from the large hourly doji candlestick which rejected the support level at 106.25. It would probably be a good idea to close this trade immediately for a very small profit as it does not seem as if the resistance at 106.73 is going to be broken soon, but the FOMC release later is an unknown factor.

Today’s USD/JPY Signals

Risk 0.75%.

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

Short Trade Ideas

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 106.73, 107.21, or 107.26.
  • 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.
  • 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 Ideas

  • Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 106.47 or 105.69.
  • 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.
  • 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.

USD/JPY Analysis

I wrote yesterday that the price would continue moving down to reach the next support level at 106.25. I saw this as likely to be the day’s pivotal point: a bullish bounce might give another bull run up to 106.73, but a sustained bearish break could see a fall down to the 105.69 area, which has also been strong support. If 106.25 broke down as New York came online, I will take a bearish bias until 105.69 for today.

This was a good call as the price and time mentioned were indicative of what would happen over the rest of the day as 106.25 broadly held after being reached, and the price made another run up to get close to the resistance level at 106.73 before turning bearish again in the past few hours.

The technical situation has not changed much, but it seems that the resistant area close to 106.73 and the long-term bearish trend line shown in the chart below is still holding.

We have new support at 106.47 but it looks likely to be weak. If it breaks down, I see a strong movement down to 105.69 as quite likely to happen, so I would take a bearish bias if we are getting new lows below 106.47 at 9am New York time, especially if the U.S. stock market is selling off at the same time.

usdjpy

There is nothing of high importance due today concerning the JPY. Regarding the USD, there will be a release of FOMC Meeting Minutes at 7pm London time.

Adam Lemon

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.