USD/JPY Forex Signal

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USDJPY: Ranging environment

Last Thursday’s signals were not triggered, as unfortunately the bullish price action took place a little way below 108.30.

Today’s USD/JPY Signals

Risk 0.75%.

Trades must be entered from 8am New York time Monday until 5pm Tokyo time Tuesday. 

Short Trade Ideas

⦁ Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 109.13 or 109.48.

⦁ 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 108.86, 108.63, or 108.30.  

⦁ 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 last Thursday that as the key support level at 108.65 had broken down, it seemed clear that the bullish breakout above the key pivotal area at about 109.00 had failed, and that momentum was with the bears. I was ready to take a bearish bias on this pair if the price had been below 108.65 at 10am New York time, and was breaking to new lows on short time frames very soon after that.

This was a good call as the price did so and went on to fall quickly by about another 35 pips before finding support at the next support level I had identified, at 108.30, although the bounce was a little too low to give a good long trade entry signal at that point. The price has been rising slowly ever since and is now back up above new support at 108.86.

The Japanese Yen is relatively weak although the U.S. Dollar is not very strong. It seems that we are in a ranging environment and so bearish pressure is likely to step in again the closer we get to 109.00. It should be a relatively quiet day in the Forex market, so I see a short trade from a bearish rejection of the nearest resistance level at 109.13 as the best trade set-up which is likely to happen today. I would take a bearish bias if we get a solid rejection of 109.13 after New York opens.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.
Learn more from Adam in his free lessons at FX Academy