USD/JPY Forex Signal: Consolidation Below 107.05

USD/JPY: Low volatility in this currency pair

Last Thursday’s signals produced a short trade from the bearish pin candlestick which rejected the resistance level at 107.05. This trade has gone nowhere so it may be wise to exit it at break even.

Today’s USD/JPY Signals

Risk 0.75%.

Trades must be entered from 8 am New York time Monday to 5 pm 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 107.05 or 107.86.
  • 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.

USD/JPY Analysis

I wrote last Thursday that a daily close below 106.00 would be a very significant bearish breakdown. For this reason, I thought that the support levels near that round number could be very interesting if reached. However, they have still not been touched yet.

The price has done nothing over the past few days except consolidating below the resistance level at 107.05.

There is little to add except a break above 107.05 will be a mildly bullish sign, whereas a daily close below 106.00 will be a very bearish sign if it happens.

I would avoid trading this currency pair for the time being because these two currencies are so highly correlated these days, moving together as relative safe havens.

There may be potential for a short trade entry if there is another strongly bearish failure at 107.05 after New York opens today.

USD/JPY

 

There is nothing of high importance scheduled today regarding either the JPY or the USD.

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.