USD/JPY Forex Signal: More Bearish

Adam Lemon

We are seeing a very interesting development here: for a long time, the Yen has barely moved against the U.S. Dollar and has just acted as a safe haven.

USD/JPY: Yen standing out after long dull patch

Yesterday’s signals were not triggered as the price did not reach any key support or resistance levels after the New York session began.

Today’s USD/JPY Signals

Risk 0.75%.

Trades must be taken from 8 am New York time Wednesday to 5 pm 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 105.39, 105.81, 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 104.87.
  • 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 yesterday that the situation had become more bearish, with seeming new lower resistance at 105.81 suggesting looking for short trades only below that level. In fact, I wanted to avoid any long trade until we saw a bullish bounce at 104.87.

This was a good and accurate call, as the price never even retested 105.81 and fell further, breaking below the lower trend line. The bearish price action also printed likely new lower resistance at 105.39.

We are seeing a very interesting development here: for a long time, the Yen has barely moved against the U.S. Dollar and has just acted as a safe haven. Now, we are starting to see some genuine strength in the Yen even as stock markets gain a little. The Yen has some relative strength.

Despite the bearish short-term situation, it is worth being aware that the area around 105.00, especially the support level at 104.87, represents a long-term pivotal point. This means that a strong bullish rebound from this area is very possible, and we will be getting the FOMC release in a few hours, which often makes a major impact on this pair, sometimes even causing a long-term trend change.

For these reasons I see short-term day trading opportunities short between 105.39 and 105.00, but I would be careful being short below 105.00 until an hour after the FOMC release. A long trade from a bounce at 104.87 at about the time the release happens could also be an excellent long-term opportunity.

USD/JPY

Regarding the USD, there will be a release of Core Retail Sales data at 1:30pm London time. The Federal Reserve will be releasing their Economic Projections, Statement, and Federal Funds Rate at 7pm followed half an hour later by the usual press conference. Concerning the JPY, the Bank of Japan will be releasing its Monetary Policy Statement late during the Asian session.

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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