USD/JPY: More bearish on deteriorating risk sentiment
Yesterday’s signals were not triggered, as there was insufficiently bearish price action when the price first reached 107.86.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be taken from 8am New York time Wednesday until 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 108.23, 108.54, or 108.61.
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 or 106.43.
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 the price looked likely to break above the nearest resistance level at 107.86 and then continue upwards to reach the next resistance level at 108.23. This was a fairly good call although the price only reached as high as 108.16 before falling to test the support level at 107.52, where it sits now as at the time of writing.
It looks as if this 107.50 area is going to be today’s pivotal point. If it breaks down, we could see a further downwards move as there is room to fall in the absence of support levels until above 106.80.
I will be prepared to take a bearish bias if 107.50 holds up until the New York open and we see two consecutive hourly closes shortly after that time, especially if that coincides with a selloff in the U.S. stock market once it opens.
There is nothing of high importance scheduled today regarding the JPY. Concerning the USD, there will be a release of the ADP Non-Farm Employment change forecast at 1:15pm London time.