USDJPY: Bearish on risk-off sentiment
Yesterday’s signals produced a profitable long trade from the bullish rejection of the support level at 107.78. It would be wise to exit fully from such a position if the price fails to break above 108.64 over the next few hours.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be entered between 8am New York time Wednesday and 5pm Tokyo time Thursday.
Short Trade Ideas
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 108.64, 108.92, 109.00, or 109.18.
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 108.27, 107.78, 107.63.
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.
USD/JPY Analysis
I wrote yesterday that I would take a bullish bias if we got a firm bullish bounce at any of the support levels identified. I also thought that if the price could get established above 108.58 that would be a further bullish sign.
This turned out to be a good call but not in the way I expected – the price initially failed at 108.58 and turned bearish, so I was right to look at this level, before falling strongly when news broke about the Iranian missile attack on U.S. bases in Iraq. However, the key support at 107.78 held and gave a nice long trade entry in the end after all.
Risk sentiment is recovering as it seems the U.S. is not taking any further military action for the time being, and as far as is known, the strike last night caused no casualties.
The technical situation is back to where we were yesterday, just with the pivotal resistance at 108.58 moved up by a few pips to 108.64. I would take a bullish bias if we get three consecutive hourly closes after New York opens above 108.64.
There is nothing of high importance due today regarding the JPY. Concerning the USD, there will be a release of the ADP Non-Farm Employment Change at 1:15pm London time.