USD/JPY Forex Signal: Consolidation Continues

Adam Lemon

USD/JPY: Strong support at 107.36

Last Thursday’s signals were not triggered as the bearish price action took place above the resistance level identified at 107.58.

Today’s USD/JPY Signals

Risk 0.75%.

Trades must be taken from 8 am New York time Monday until 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 107.76, 107.87, or 108.23.
  • 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 107.36 or 106.80.
  • 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 best trading approach here today was likely to be respecting the ranging conditions and trading reversals of big spikes after the big jobs numbers release from resistance at or above 108.23 or support at or below 106.80.

I was correct that ranging conditions would dominate, but the price did not move far enough in the end to reach either of the limits I gave to the range.

The price has continued to consolidate since Thursday and is still ranging, so there is no change to the technical picture. However, it may be that conditions are a little more bullish, as the strongest key level nearby seems to be clear at 107.37, and stock markets are mostly rising globally, especially in the U.S.A. Therefore, it is possible to argue for a weakly bullish bias.

Due to the strength of 107.37 and the mostly bullish direction, despite the ranging conditions, I will be happy to take a long trade entry if we get a bullish bounce at 107.37 at or soon after the New York open.

USD/JPY

There is nothing of high importance scheduled today regarding the JPY. Concerning the USD, there will be a release of ISM Non-Manufacturing PMI data at 3pm London time.

 

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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