USD/JPY Forex Signal: Bearish Breakout

Adam Lemon

Price approaching multi-month low at 104.00

Last Thursday’s signals were not triggered as the bearish price action took place slightly above the resistance level identified at 104.87.

Today’s USD/JPY Signals

Risk 0.75%.

Trades may only be entered between 8am New York time Wednesday and 5pm 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 104.37 or 104.55.
  • 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 Idea

  • Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 103.07.
  • 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.

USD/JPY Analysis

I wrote last Thursday that the price had just hit a new 50-day low which was a bearish sign, but I would not be truly bearish until the price got established below 104.37 which was the really pivotal point here. I said it was worth paying attention now to this currency pair.

This was a good call as the level at 104.37 has, as I suspected, turned out to be very pivotal. Now we have a break below that level and the price has a lot of room to fall.

We saw yesterday the lowest New York closing price in this currency pair for several months, and the price is now well below 104.37 and is heading for 104.00 which is the lowest price we have seen in months too.

These are bearish signs, the odds are with the bears, the global risk-off market environment is boosting the Japanese Yen which is now the strongest major currency.

There are no key support levels until 103.07.

I take a bearish bias and will be even more bearish below 104.00. There is a good short trading opportunity in this currency pair right now.USDJPYRegarding the JPY, the Bank of Japan will be releasing its Monetary Policy Statement and Outlook Report late in the Tokyo session. There is nothing of high importance due today concerning the USD.

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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