USDJPY: Long-term bullish breakout failed
Yesterday’s signals were not triggered, as the price never quite reached the support level identified at 108.91.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be entered between 8am New York time Tuesday and 5pm Tokyo time Wednesday.
Short Trade Idea
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 109.96.
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 Ideas
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 108.91, 108.82, 108.74, or 108.27.
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.
USD/JPY Analysis
I wrote yesterday that the price trading above 109.50 was technically significant and bulls had a small edge here. That edge would grow if the price is above 109.50 at the New York close later.
Bulls still needed to worry about the low volatility and the absence of any obvious support levels above 109.00. The price could easily see a sharp downwards movement, although a continuation of the rise is the most likely scenario.
This was a good call as I correctly identified the risk of a sharp fall, which was what happened as the price struggled to hold up above the key technical area at about 109.50. The sharp fall brought the price down to just a few pips above my nearest support level at 108.91 which was also a good call as a support level.
Looking at the price chart now, we can see that after this sharp downwards movement, the price made a small bullish retracement which was halted at 109.20, and the price is now moving down from there quite cleanly. I think today’s pivotal point is highly likely to be the nearest support at 108.91 which is buttressed by two additional support levels just below it. This cluster is quite likely to hold over the short term, so I see a cautious long trade from a bullish bounce at 108.91 as the best trade scenario which might set up today – I would take a weak bullish bias if we get this later.
There is nothing of high importance due today concerning either the JPY or the USD.