USD/JPY: Strong recovery but stalling at 105.00
Yesterday’s signals produced a losing short trade from the bearish hourly pin candlestick which rejected the resistance level at 103.48.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be entered between 8am New York time Tuesday and 5pm Tokyo time Wednesday.
Short Trade Ideas
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 105.66 or 106.00.
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 103.66 or 103.07.
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 it was very likely the price would fall further and price action over the short term would be dominated by downwards impulsive moves. I was completely wrong. Although very large movements over short time periods tend to be following by reversions to mean, I thought the ongoing panic over coronavirus would see even more flow into the Japanese Yen, and normal technical price behaviour would be overrun by panicking sentiment. We did see my resistance level at 103.48 initially hold and produce a short trade entry signal, so it held very briefly before breaking.
We do continue to see high volatility here, and this pair is at the centre of the Forex market’s focus without doing, continuing to trade with a high level of volatility. Technically, we have new significant support levels at 103.48 and 103.66, and the recent high has been made at 105.00 which is a big round number. We are likely to see continuing small movements in the price but as long as it stays between 103.48 and 105.00, we have no more directional clues. Of course, there are likely to be further moments of risk panic in financial markets over coming days unless the coronavirus somehow dies out in the U.S.A. and in Europe, which is very unlikely at least in Italy which is now under total lockdown for non-essential movement.
I take no directional bias on this pair for the time being, but nimble traders on short time frames are likely to see plenty of tradable directional swings.
There is nothing of high importance due today regarding either the JPY or the USD.