USD/JPY Forex Signal: Bullish Consolidation

Adam Lemon

USD/JPY: Pivotal point at 106.07

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.

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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.USDJPYThere is nothing of high importance due today regarding either the USD or the JPY.

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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