USD/JPY Forex Signal: Still Bearish

Mahmoud Abdallah

The general trend of the USD/JPY pair is still bearish, which will support the buying operations if all technical indicators are heading towards oversold areas.

USD/JPY: Bears in control. 

Today’s USD/JPY Signals

  • Risk 0.75%.
  • Trades may only be taken between 8 am New York time and 5 pm Tokyo time today.

Short Trade Ideas

  • Go short following a bearish price action reversal on the H1 time frame time immediately upon the next touch of 105.90 or 105.40.
  • 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

  • Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 106.35 or 106.90.
  • 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 Pair Analysis

The recent USD/JPY performance confirms what we mentioned in the recent technical analysis that the bears' control over the performance is still stronger. The gains of the correction attempts did not exceed 106.20, and the pair returned to stabilize around the 105.90 support now. The severe Coronavirus outbreak in the United States and the increase in tensions with China to unprecedented levels have increased the purchases of Japanese currency as a safe haven. There was a lot of confusion about US President Trump's executive order and the measures that were passed over the weekend. It introduced a deferment from collecting payroll "taxes" that fund Social Security and Medicare for people earning less than $100,000 a year from September 1 through the end of the year. He indicated the possibility that the postponement would turn into a permanent reduction if he was re-elected. However, since it is only a delay, many employers are more likely to choose to collect it now rather than try to recover it later. The immediate reversal, if happened, will weaken Social Security's financial resources. However, there has long been talk of a Social Security test rather than a right of citizenship.

Trump also gave away $300 a week for federal unemployment insurance (replacing the $600 program a week that ended last month) if states offered $100 a week, which seems to exclude only Puerto Rico. However, it is not clear whether the states will need to provide another $100 per week for this program. It appears that the rulers have not been consulted, and many have objected. Moreover, the federal funds come from the redirection of disaster relief funds totaling about $44 billion. Given the demand, the funds should not be expected to last more than a month. Recently, Trump also extended the moratorium on student loan service and renewed the ban on some evictions and foreclosures. This seems the least controversial but has been criticized for being too narrow.

The general trend of the USD/JPY pair is still bearish, which will support the buying operations if all technical indicators are heading towards oversold areas.

JPY/USD chart

 

Regarding the US dollar, PPI reading will be announced. As for the Japanese yen, loans, Japanese current account and Current Economic Situation Watchers Index will be announced.

Mahmoud Abdallah
Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.

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