USD/JPY: Level at 106.41 looks extremely pivotal now
Yesterday’s signals as the resistance level at 106.21 did not hold until the New York open.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be entered between 8 am New York time Thursday and 5 pm Tokyo time Friday.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 106.41 (if it holds until the New York open), 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 106.10, 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.
USD/JPY Analysis
I wrote yesterday that bulls were now facing a key test with the trend line shown in the price chart below confluent with formerly pivotal resistance at 106.41, so I saw this as the key level to watch today.
The price moved little yesterday, as I had predicted, but never even reached this level at 106.41.
It has become even more clear that this level at 106.41 is very important and pivotal. The price has continued inching up towards it.
I will take exactly the same approach today. I will take a bullish bias if the level at 106.41 holds until the New York open and then we get two consecutive hourly closes above it. I will take a bearish bias if the price makes a bearish reversal off that level soon after the New York open.
U.S. stock markets are very over-extended and the VIX has hit an all-time high, suggesting that a sudden sharp fall in stocks would not be a big surprise if it happens. This would be likely to send a flow into the JPY, which could produce a major thrust down in this currency pair, especially if the move bounces off 106.41.
Concerning the USD, there will be a release of ISM Non-Manufacturing PMI data at 3pm London time. There is nothing of high importance due today regarding the JPY.