USD/JPY Forex Signal: Bearish Breakdown

Adam Lemon

USD/JPY: Strong Japanese Yen

Yesterday’s signals were not triggered as there was no bullish price action when any of the identified support levels were first reached.

Today’s USD/JPY Signals

Risk 0.75%.

Trades may only be entered between 8 am New York time Wednesday and 5 pm Tokyo time Thursday.

Short Trade Ideas

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 105.20, 105.31, or 105.49.
  • 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 104.87 or 104.37.
  • 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 yesterday that as there was still a weak long-term bearish trend in force which might reassert itself, so I remained interested in short trades from reversals at any key resistance level despite the short-term bullish trend.

This was a good call as we have seen the price fall quite strongly in recent hours to break down to reach the lowest price seen her in about a month.

So far, the support level at 104.87 is holding and this may produce a good long-term long trade entry if the price turns around – risky, but with a potentially high reward to risk ratio.

I think everything will now depend upon whether the price gets established below 104.87 (bearish sign) or whether the long-term range holds, and the price holds up from 104.87.

If the price does break lower, there could be another long-term long trade opportunity at 104.37 which is even more important than 104.87 as a boundary of the long-term price range.

USD/JPY

There is nothing of high importance due today concerning 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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