USD/JPY Forex Signal: Ranging From 105 to 106

Adam Lemon

USD/JPY: Consolidation likely to persist

Yesterday’s signals were not triggered, as there was no bullish price action when the support level identified at 105.40 was reached.

Today’s USD/JPY Signals

Risk 0.75%.

Trades must be taken between 8 am New York time Tuesday to 5 pm Tokyo time Wednesday.

Short Trade Ideas

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 105.81 or 106.08.
  • 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 105.23 or 104.87.
  • 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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The yen is a popular asset during turbulent times.

USD/JPY Analysis

I wrote yesterday that it looked likely that reversals at both key support and resistance levels could produce a modest profit in this currency pair, so that would probably be the best strategy to take here.

This was a relatively OK call as the price has basically continued to range between 105.00 and 106.00, although the support level at 105.40 broke down.

There is no real change to the technical picture, which is one of range and consolidation. The best approach here will probably be to trade reversals from extremes such as 106.08 or 104.87 if and when they are reached so I will look for a long at either of the nearest two support levels, or a short from 106.08.

Both the U.S. Dollar and the Yen are acting as safe havens within the dominant risk-on / risk-off market paradigm, which is why opportunities in trading this currency pair are quite limited.

USD/JPY

There is nothing of high importance due today regarding the JPY. Concerning the USD, there will be a release of CPI (inflation) data at 1:30 pm London time.

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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