USD/JPY Forex Signal: Double Bottom at 104.37?

Adam Lemon

USD/JPY: Pair finally becoming interesting

Yesterday’s signals were not triggered as the price action at 104.37 was not bullish enough to generate a long trade entry signal, although the level-capped the day’s low as strong support.

Today’s USD/JPY Signals

Risk 0.75%.

Trades must be taken from 8 am New York time Thursday to 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 104.87, 105.20, 105.31, or 105.49.
  • 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 104.37.
  • 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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USD/JPY Analysis

I wrote yesterday that I thought everything would now depend upon whether the price got established below 104.87 (bearish sign) or whether the long-term range would hold, and the price holds up from 104.87.

If the price did break lower, I saw that 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.

This was a good and accurate call as the price broke below 104.87 and then proceeded to 104.37 as expected, where it made a bullish turn.

The price has just hit a new 50-day low which is a bearish sign, but I will not be truly bearish until the price gets established below 104.37 which is the really pivotal point here. If 104.37 holds, we could see the start of a long-term bullish move.

I will take a long trade from another firm bullish bounce at 104.37 but I am also ready to go short from a bearish reversal at any of the resistance levels identified above the current price.

This pair has been boring for a long time with very low volatility, but it seems to be changing so it worth paying attention to this currency pair right now.

USD/JPY

There is nothing of high importance due today concerning the JPY. Regarding 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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