USD/JPY Forex Signal: Consolidating Triangle

Adam Lemon

USD/JPY: Bulls have small edge

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 taken between 8am New York time Monday and 5pm Tokyo time Tuesday.

Short Trade Ideas

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 107.40, 107.59, 108.04, 108.21.

  • 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 106.74, 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 last Thursday that the technical picture here was bearish but congested, meaning movements were less likely to flow strongly or be very predictable. I was correct to be cautious and stand aside at least insofar as my bearish assumption turned out to be wrong that day.

The technical picture now is slightly bullish, but very evenly balanced as the price is caught near the tip of a narrowing, consolidating triangle pattern, as highlighted in the price chart below.

I think we are more likely to see the price break out above 107.40 than break down below 106.74, due to both the short-term price action currently looking quite bullish, and the fact that this consolidation was preceded by a bullish movement.

I will take a bullish bias on this currency pair later if we get two consecutive hourly closes above 107.50.USDJPYThere is nothing of high importance due today concerning either the JPY or the USD.

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

Currency Pairs:
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