USD/JPY: Strongly improving risk sentiment
Yesterday’s signals were not triggered, as there was no bearish price action at 109.24.
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 109.74, 110.07, or 110.69.
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 109.25, 108.98, or 108.27.
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 the price was getting close to the pivotal level at 109.24, so I would look to either trade a convincing bearish reversal short from that level, or to take a more cautiously bullish bias if we had gotten a couple of consecutive hourly closes above it after New York opened.
We did get those closes, and at the time of writing the price is up by another 30 pips from that point, so this was a good bullish call.
Risk sentiment has improved strongly, boosting stock markets, and boosting this pair also. The strong breakout above 109.24 was technically significant and we now have a more bullish situation. However, the price still faces long-term highs above 110.00 and the big round number at 110.00 itself, so may at least pause in that area.
I think we may get a bearish retracement at or near to 110.00, but after that, I would be very interested to take a long trade from a bullish bounce at the new probably flipped support level at 109.24.
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 and ISM Non-Manufacturing PMI data at 3pm.