USD/JPY Forex Signal: Bullish Breakout to 5-Year High

Adam Lemon

The big round number at 115.00 has finally been fully overcome.

Today’s USD/JPY Signals

Risk 0.75%.

Trades must be taken earlier than 5pm Tokyo time Wednesday.

Short Trade Idea

  • Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of 116.29 or 116.79.
  • 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.
  • Remove 50% of the position as profit when the price reaches 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 115.02.
  • 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.
  • Remove 50% of the position as profit when the price reaches 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

Recent days have seen renewed bullishness in the USD as short-term yields on the currency rise to break to new multi-month highs. The Japanese Yen has been the weakest major currency in the Forex market for several days now. This puts the USD/JPY currency pair at the heart of the Forex market and the recent Asian session saw the price break strongly to a new 5-year high price above the previous record of 115.41. Volatility was higher than is usual for an Asian session.

These are bullish signs which suggest there is a long trade opportunity here as it is more likely than not that this rise will continue over the coming days. This currency pair is often correlated with the American stock market which is also rising bullishly and close to breaking to new record highs.

The problem for traders looking to go long here right now is that there are no obvious support levels above 115.02 and the price is approximately 80 pips above that at the time of writing, so picking an entry point could be difficult. It may be that the best course of action is to wait for the end of today’s New York session and wait to see if the price will close near the day’s high price and if it does, then make a long trade entry. I do not want to make any short trade today, but I hope to go long here at the end of today’s New York session. The price is breaking strongly into long-term “blue sky” and that is a buy signal in trend and momentum.

USD/JPY

Concerning the USD, there will be a release of ISM Manufacturing PMI and JOLTS Job Openings data at 3pm London time. There is nothing of high importance scheduled today regarding 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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