USD/JPY Forex Signal: More Bearish Below 105.30

Adam Lemon

USD/JPY: Approaching the lower edge of the long-term price range

Yesterday’s signals were not triggered as the bullish price action took place below 105.23.

Today’s USD/JPY Signals

Risk 0.75%.

Trades must be taken between 8 am New York time Thursday and 5 pm 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 105.30, 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 104.87 or 104.37.
  • 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 there was no change to the prevailing situation and I would take the same approach to this currency pair – look for a short trade from a reversal at 106.08 or a long trade from a reversal at 104.87.

This has been enough to stay out of trouble and in a sense has been proven to be a correct approach as so far neither level has even been reached.

However, the technical situation is beginning to show signs of changing in a more bearish direction, with the new lower resistance at 105.30 looking pivotal we could also draw a solid bearish trend line in the price chart shown below holding the current downwards wave.

The bearishness is due to the fact that markets are taking a more risk-off sentiment now, producing a flow into the Japanese Yen. Of course, this flow is stronger in the Yen crosses.

Despite the more bearish outlook, we still have not reached the strong long-term support at 104.87 or even the round number at 105.00, both of which are very capable of producing a long or medium-term bullish trend reversal.

I am prepared to take a short trade from 105.30, but I would watch very carefully what would happen to any open trade at 105.00 or 104.87. I would also be prepared to take a long trade from a bullish bounce at 104.87 if it happens later.

USD/JPY

There is nothing of high importance due today regarding the JPY. Concerning the USD, there will be a release of Unemployment Claims 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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