USD/JPY: Too much support below 110.00 for bears to break down
Yesterday’s signals were not triggered, as the bullish price action a few hours ago at the support level identified at 109.95 was not strong enough to trigger a long trade entry signal.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be entered from 8am New York time Thursday to 5pm Tokyo time Friday.
Short Trade Idea
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 111.11.
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 109.95, 109.54, or 109.25.
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 despite the flight into risk, the Yen is not advancing as strongly as it might because of the fear that Japan could be hit badly by the virus due to its proximity to the epicentre in China.
I thought that it will be hard to see the price fall much further, so I would avoid trading this currency pair for the time being.
This was a good and accurate call, as although the price has bounced and fallen again, it remains unable to break below this very key support at 109.95, even with the USD weakening a little. This is because Japan is just too close to China for the Yen to be seen as the best safe haven currency right now. Technically, the price was consolidating below 109.95 for such a long time before the recent bullish breakout, that it is going to be very difficult for the price to fall much further.
I see the same conditions prevailing so again would stay away from trading this currency pair right now until market sentiment changes dramatically one way or the other.
There is nothing of high importance due today regarding either the JPY or the USD.