USD/JPY: Japanese Yen is the strongest major currency
Last Thursday’s signals produced a very profitable short trade from the bearish inside candlestick which rejected the resistance level I had identified at 104.87.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may be taken from 8 am New York time Monday to 5 pm Tokyo time Tuesday.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 104.37 or 104.87.
- 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 104.09 or 103.07.
- 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 last Thursday that this currency pair was worth keeping a close eye on. There was bearish momentum on all time frames. The price had lots of room to fall all the way to new multi-month low prices.
I said I would take an enthusiastic bearish bias if we saw a daily (New York) close below 104.75. We did, and the price has fallen from there by another 75 pips, so this was a great call.
We have seen the price of this currency pair reach its lowest level since March.
There has been strong bearish momentum here, but we are now seeing a short-term bullish bounce at the support level of 104.09.
The flow into the Yen has been caused at least partially by falling stock markets. In off-hours trading today, the S&P 500 Index has fallen by quite a lot.
It is worth keeping a close eye on 104.37 which is the nearest resistance level. If it holds throughout today, that will be a very bearish sign. If the price closes below 104.50 it will also be bearish. However, even if the price closes above that, the action suggests we will see another downwards movement.
I will take a bearish bias today if we get a bearish reversal at a key resistance level, or if we get two consecutive hourly closes below 104.00.
This currency pair is at the heart of the Forex market today and is worth trying to trade now.
There is nothing of high importance due today concerning the JPY. Regarding the USD, the Chair of the Federal Reserve will be giving a minor speech at 3 pm London time.