USD/JPY Forex Signal: Range Holds

Adam Lemon

USD/JPY: Pivotal point likely at 105.40 or 105.23

Last Thursday’s signals were not triggered, as there was insufficiently bullish price action at 105.81.

Today’s USD/JPY Signals

Risk 0.75%.

Trades may only be entered 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 105.81 or 106.08.
  • 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 105.40 or 105.23.
  • 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.

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USD/JPY Analysis

I wrote last Thursday that it seemed likely that the best opportunities would be a long trade from a bullish bounce at 105.81 if that level were hit again, or from a bullish breakout above 106.07.

This was enough to stay out of trouble, but I was wrong about the more likely direction being to the long side. Interestingly, we have seen the U.S. stock market rise while the Japanese Yen has strengthened against the U.S. Dollar, so the real story seems to be a weakness in the U.S. Dollar.

The long-term resistance just above 106.00 has held and we see the price now back well within its range of recent weeks.

The two nearby support levels look strong.

It looks likely that reversals at both key support and resistance levels are likely to produce a modest profit in this currency pair, so that will probably be the best strategy to take here today. As it is Monday and volatility is low, it will probably be wise to have conservative take profit targets.

USD/JPY

There is nothing of high importance due today regarding either the USD or the JPY. It is a public holiday in the U.S.A. today.

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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