USD/JPY Forex Signal: Bulls Hit 3.5 Year High Price

Adam Lemon

Big round number at 115.00 overhead.

Last Thursday’s USD/JPY signal was not triggered as none of the key levels identified as support or resistance were reached that day.

Today’s USD/JPY Signals

Risk 0.75%/.

Trades may only be entered before 5pm Tokyo time Thursday.

Short Trade Idea

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 115.45.

  • 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.

  • Take off 50% of the position as profit when the price reaches 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 114.46 or 113.80.

  • 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.

  • Take off 50% of the position as profit when the price reaches 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 last Thursday that this currency pair was now in a very bullish position, although the short-term price action was suggesting a downwards price movement over the coming hours.

However, I was still looking to the bullish side, noting that the price had a lot of room to rise to the 115.00 area, so I was still ready to enter a long trade from any bullish bounce we may get at either 113.20 or 113.03.

Unfortunately, the price never quite retraced to 113.20 as it has continued to rise strongly since then and we are now close to 115.00, as I had expected would happen.

The main drivers of the USD/JPY price are still the weakness of the Japanese yen, which persists still, with the yen the weakest major currency, and the rising US 10-year treasury yield which is preventing the USD from falling by much upon reaching a new 5-month high at 1.65%.

These bullish price drivers remain valid, and we have a strong bullish trend here. However, it may that the price will struggle to rise much higher over the near term as we approach the big round number at 115.00.

I see the best approach as watching the new support level at 114.46 and how the price reacts there. If the level holds up, we are likely to see the price continue to advance to a new 3.5-year high price. A long trade from a bullish bounce following a retracement to the support level at 113.80 also looks potentially attractive. 

USD/JPY

There is nothing of high importance scheduled today regarding 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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