USD/JPY Forex Signal: Weakly Bearish

Adam Lemon

Today we see the Dollar start to weaken again, including here against the Yen.

USD/JPY: Start of a bearish price channel?

Last Thursday’s signals were not triggered, as none of the key levels identified have been reached since then.

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 106.07 or 106.50.
  • 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

  • Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 105.78.
  • 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 off 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 last Thursday that there was little new to say except the price action was starting to look a little more bearish.

I thought the best approach would be to look for a long trade from a bullish bounce at 105.78 or a short trade from a bearish reversal at 106.50 but I thought it was likely neither level would even be reached, and I was correct so this was a good call.

The bearish trend I started to see has strengthened, and we can draw an obvious emerging descending trend line connecting the tops of recent swing highs. We may soon be able to draw a symmetrical lower trend line to form a full bearish price channel.

We saw the U.S. Dollar move quite firmly against its long-term bearish trend last week and recover some ground. Today we see the Dollar start to weaken again, including here against the Yen.

It seems clear that the support level at 105.78 is going to be pivotal today. If that price is hit and we get a bullish bounce, I will take a long trade but will monitor closely on short time frames. This is because bearish pressure is really building above 106.00 so it is hard to see the price breaking above the descending trend line any time soon.

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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