USD/JPY Forex Signal

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USDJPY: Bullish above 108.79

Yesterday’s signals were not triggered, as none of the key support and resistance levels identified were touched yet.

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 Idea

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 109.48 or 109.96.

  • 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

  • Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 108.79, 108.50 or 108.07.

  • 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.

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USD/JPY Analysis

I wrote yesterday that it seemed increasingly likely that the market was waiting for the U.S. FOMC release tomorrow before “deciding” whether to make this crucial breakout beyond 109.00 – but it might still happen before that. I remained excited about a bullish opportunity here following a decisive breakout above this long-term pivotal level at 109.00.

This was a good call as the price has remained bullish but below 109.00 as we await crucial USD and JPY central bank inputs over the coming 20 hours.

It can be seen within the price chart below that the price has breached the ascending trend line, which would logically be a bearish sign. However, this trend line no longer seems important, it has been replaced as a pivotal point by the new support level at 108.79. The more the price remains above this level, the more optimistic I will be for the long trade breakout opportunity above 109.00 which is likely to arise later.

The USD data releases may well push the price initially below 108.79 so even this level is not as decisive as it usually would be.

I see the key thing to watch for as whether the price breaks above 109.00 upon the FOMC release and stays there over the first hour following the release. I would take a bullish bias later if this scenario plays out.USDJPYRegarding the USD, there will be releases of ADP Non-Farm Employment Change data at 12:15pm London time, followed by Advance GDP at 12:30pm, and the FOMC Statement / Federal Funds Rate at 6pm then the usual press conference half an hour later. Concerning the JPY, there will be a release of the Bank of Japan’s Monetary Policy Statement and Outlook Report late in the Asian session.

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.