USD/JPY Forex Signal: Consolidation Likely

Adam Lemon

The best trading approach here today is likely to be respecting the ranging conditions and trading reversals of big spikes after the release from resistance at or above 108.23 or support at or below 106.80.

USD/JPY: Narrow range between 107.36 and 107.58

Yesterday’s signals were not triggered, as none of the key support or resistance levels identified were reached.

Today’s USD/JPY Signals

Risk 0.75%.

Trades may only be entered between 8 am New York time Thursday and 5 pm Tokyo time Friday.

Short Trade Ideas

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 107.58, 108.23, 108.54, or 108.61.
  • Place the stop loss 1 pip above the local swing high.
  • Move the stop loss to break even once the trade is 20 pips in profit.
  • Take off 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to run.

Long Trade Ideas

  • Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 107.36 or 106.80.
  • Place the stop loss 1 pip below the local swing low.
  • Move the stop loss to break even once the trade is 20 pips in profit.
  • Take 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to run.

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 yesterday it seemed the 107.50 area was going to be the day’s pivotal point. I was prepared to take a bearish bias if 107.50 held up until the New York open and we saw two consecutive hourly closes below it shortly after that time. This did not happen, with the price instead just consolidating within a narrow range between 107.36 and 107.58.

This currency pair is usually very sensitive to key U.S. data releases such as the non-farm payrolls number which we will get around the New York open. This release is almost certain to see a breakout from the narrow range and possible volatile price spikes, making trading difficult at this time.

The best trading approach here today is likely to be respecting the ranging conditions and trading reversals of big spikes after the release from resistance at or above 108.23 or support at or below 106.80.

USD/JPY

There is nothing of high importance scheduled today regarding the JPY. Concerning the USD, there will be a release of U.S. Non-Farm Payrolls data at 1:30 pm 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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