USD/JPY Forex Signal: More Bearish Below 107.00

Adam Lemon

The long-term trend is bearish in this currency pair, which makes it difficult to be comfortable taking long trades except in exceptional circumstances.

Yen strengthening on risk-off sentiment.

Yesterday’s Signals were not triggered as none of the key levels identified were reached that day.

Today’s USD/JPY Signals

Risk 0.75%.

Trades may only be taken between 8am New York time Wednesday and 5pm Tokyo time Thursday.

Short Trade Idea

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 107.59.
  • Put 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.
  • 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

  • Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 106.43 or 106.15.
  • Put 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.
  • 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.

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USD/JPY Analysis

I wrote yesterday that I would not take any short trades, but I would be prepared to take cautious long trades from bullish bounces at either 107.34 or 107.02.

This was a good call, as the price got established relatively easily below the support level which was reached during the day at 107.34. The lower support level at 107.02 was only reached after the Tokyo session ended, and at the time of writing is continuing to hold as support.

The support level at 107.02 has been very key and is confluent with the round number at 107.00, suggesting it might be strong. The long-term trend is bearish in this currency pair, which makes it difficult to be comfortable taking long trades except in exceptional circumstances.

I prefer to only look for short trades today, taking a bearish bias once we get two consecutive hourly closes below 107.00 after New York opens, down to at least the next support level at 106.43.

USD/JPY

There is nothing of high importance due today concerning the JPY. Regarding the USD, the Chair of the Federal Reserve will be giving a minor speech at 2pm London time.

About the Author
Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.
Learn more from Adam in his free lessons at FX Academy

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