USDJPY: Consolidating below 109.00
Yesterday’s signals were not triggered, as there was no suitable bearish price action at any of the resistance levels which were reached.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be entered between 8am New York time Thursday and 5pm Tokyo time Friday.
Short Trade Idea
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 108.94.
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 108.78 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 the picture had become much more bearish, and I saw most potential on the short side. I would take a bearish bias if we had gotten a bearish reversal following a retracement to any of the resistance levels identified above. This actually did not work well but none of the resistance levels held cleanly so there were no short entries anyway.
The technical picture now is less bearish and more finely balanced, as we see bulls and bears fighting it out between 108.78 and 108.94 (let’s call that upper limit the round number of 109.00 just a few pips higher). There are no other key levels very close by, so what will happen today is likely to be determined by whether the price gets established above 109.00 (bullish) or below 108.75 (bearish) – these are today’s likely pivotal points.
There is no long-term trend so either direction is quite valid and will probably be determined by risk on / risk off sentiment and the U.S. stock market later after New York opens.
I would take a weakly bullish bias if the price closes the first two hours after New York opens above 109.00, or a weakly bearish bias if the same happens below 108.75.
There is nothing of high importance due today concerning either the JPY or the USD.