Yesterday’s signals may have produced a losing short trade from the small bearish pin candlestick which rejected the resistance level at 106.07.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be taken between 8am New York time Thursday and 5pm Tokyo time Friday.
Short Trade Ideas
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 106.07, 106.50, or 107.07.
- 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 105.81, 105.40, or 105.26.
- 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.
USD/JPY Analysis
I wrote yesterday that the breakout we had just seen above 105.81 was a bullish sign. I thought that if the price could get established above 106.07 it would be likely to continue upwards to 106.50 at least.
I was correct to see 106.07 as the next pivotal point as this held the price down almost to the pip and prevented any further rise.
The price is now making a bullish consolidation just below 106.07.
It seems likely that the best opportunities will be a long trade from a bullish bounce at 105.81 if that level is hit again, or from a bullish breakout above 106.07 – say when there are two consecutive hourly closes above 106.08, 1 pip above the resistance level just to be on the safe side.
The risk-on rally we are seeing global markets is not strong, but it is present, so I see the opportunity as definitely likely to be on the long side. We have seen quite low volatility in this currency pair for a long time which is another sign that when there is finally a real breakout, it is quite likely to become surprisingly strong.
There is nothing of high importance due today regarding either the USD or the JPY.