USD/JPY: Bullish breakout collapsing
Last Thursday’s signals were not triggered, as none of the key levels were reached that day.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be entered between 8am New York time Monday and 5pm Tokyo time Tuesday.
Short Trade Idea
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 112.42.
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 Idea
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 110.69.
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 last Thursday that I thought the price would reach the next resistance level at 112.41 before it got back down to an area close to the big round number at 110.00. However, I also thought that the price would struggle to get above 112.41 over the near term.
I was right to be looking to the bullish side as the price rose last Thursday. I was also correct to see the price failing to get above 112.41 although I was wrong about the price touching it.
The technical picture and supporting market sentiment have changed over the past few days, as the spread of the coronavirus now seems to be threatening a global pandemic although its likely severity is still very unclear. Markets see the potential for economic damage should large-scale quarantines become necessary around the world. This has caused a flight to safety, with a sharp sell-off in stocks occurring since markets opened in Asia this week. The primary beneficiary is the precious metal gold, with the USD and JPY also getting a boost – the JPY more so than the Dollar, so this pair is selling off.
The price is likely to continue falling today, and it has quite a long way to go before it will hit any obvious support level, although there may be minor support at about 111.15.
There is nothing of high importance due today concerning either the USD or the JPY.