USD/JPY Forex Signal

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USDJPY: Messy and hard to predict

Last Thursday’s signals were not triggered, as there was insufficiently bearish price action at 106.31 that day.

Today’s USD/JPY Signals

Risk 0.75%.

Trades must be taken from 8am to 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, 107.21 or 107.26.

  • 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.

  • 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 Idea

  • Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 106.09.

  • Place 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.

  • 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 it was very hard to see what the next short-term direction would be, although I was looking to take a bearish bias below 105.57. The price held above that level and rose throughout the day before falling back from a peak near the very strong resistance level at 106.73.

The picture now looks confused and I cannot make any call beyond predicting that the resistance at 106.73 is likely to hold, as is the support at 105.57, so reversals at either extreme should be the best approach today. Beyond that, I have no directional bias here.

The other thing to note is that as it is a public holiday in the U.S., we may see a strong move at the Tokyo open – this tends to happen in this currency pair in the first Asian session immediately following a U.S. holiday.USDJPYThere is nothing of high importance due today concerning the JPY or the USD. It is a public holiday in the U.S.A. today.

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.