USD/JPY Forex Signal: Weakly Bullish Consolidation

Adam Lemon

The technical picture is weakly bullish.

USD/JPY: Long-term low near 106.00 rejected last week

Last Thursday’s signals were not triggered, as there was no bullish price action when the price first reached 106.99.

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 107.63 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 106.80, 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 we had a more bullish technical picture, after the price Wednesday powered up and cut quite easily through resistance levels to end up back above the 107.00 handle.

I thought that the price looked likely to consolidate above 107.00 but had room to rise to 107.63. I was looking for a long trade from a bullish bounce at a support level nearby, which did not happen, so this was at least enough to keep out of trouble.

We saw the price bounce off a support level confluent with the lower edge of its multi-week range at 106.15 and I said at the time this would suggest a continual rise. We are still seeing that, although the rise is slow. The price is consolidating above support at 106.80 but is struggling to get much higher. Nevertheless, the technical picture is weakly bullish.

I will take a long trade from a bullish bounce at 106.80 following a retracement to that level.

USD/JPY

There is nothing of high importance scheduled today regarding 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

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