USD/JPY Forex Signal: Completely Flat

Adam Lemon

The last 24 hours has seen one of the lowest, tightest price ranges in this major currency pair which I have ever seen – the price has barely moved.

USD/JPY: Total directionless consolidation

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

Today’s USD/JPY Signals

Risk 0.75%.

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

Short Trade Ideas

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 106.50 or 107.07.
  • 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 106.02 or 105.78.
  • 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 yesterday that I did not see either bulls or bears as having any advantage today, so I was equally prepared to take a long from a bounce at 106.02 or a bearish reversal at 106.50 as long as both levels hold into the Tokyo open.

This was a good call as both these levels held. In fact, they were not even reached.

The last 24 hours has seen one of the lowest, tightest price ranges in this major currency pair which I have ever seen – the price has barely moved.

Technically, the current picture is quite interesting – it is rare to see such a complete lack of trend over all time frames.

This very flat consolidation makes the next major price movement very hard to predict, but such extreme flatness is often followed by strong directional price movement, so it is worth keeping a cautious eye on this pair.

I am prepared to take a very cautious long from 106.02 or 106.50 if the price action seems to show a clear reversal, but I would monitor any such trade very closely in a short time frame.

USD/JPY

There is nothing of high importance due today regarding either the JPY or the USD.

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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