USD/JPY: New 6-week low price below 106.50
Yesterday’s Signals were not triggered, as none of the key levels were reached yet.
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 Ideas
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 106.42, 106.55, or 107.02.
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 Idea
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 105.21.
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.
USD/JPY Analysis
I wrote yesterday that this pair was hard to predict between 107.02 and 106.40, but I was prepared to take a short if we had gotten another strong failure following a retest of 107.02. This level was never reached. However, the price has acted bearishly, falling to new 6-week low prices, printing new lower resistance levels on the way down below 107.02, and invalidating the beginning of the bullish head & shoulders technical pattern we were seeing form between 106.40 and 106.60. These developments all point to lower prices being reached soon, so I take a bearish bias on this currency pair today as long as the price is below the lowest resistance level identified at 106.42.
It is strange that stocks are holding up while the Yen and to a lesser extent the U.S. Dollar are strengthening as safe havens. Trading European currencies crossed with the JPY short may be even more rewarding today than trading USD/JPY short.
We may see a strong price reaction later if the ADP forecast number is very different to the market’s consensus expectation.
Concerning the USD, there will be a release of the ADP Non-Farm Employment Change forecast at 1:15pm London time. Regarding the JPY, there is nothing of high importance scheduled for today.