USD/JPY: Resistance at 107.34 looks pivotal
Last Thursday’s Signals were not triggered as there was no bearish price action when the resistance levels identified at 106.42 and 106.55 were reached.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be taken between 8am New York time Monday and 5pm Tokyo time Tuesday.
Short Trade Ideas
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 107.34, 107.59, or 107.73.
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
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 107.02 or 106.43.
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 it looked like we were just seeing a normal bullish retracement within a medium-term bearish trend, so I was be prepared to take a short trade from a bearish reversal at either of the resistance levels later.
The price did make another downwards push later, although it did not reverse at either of the key levels, so I was on the right track for the day. However, the picture began to change on Friday and even more so in recent hours as the price has risen quite strongly, most importantly breaking firmly above the very pivotal former resistance level at 107.02. This is a bullish sign.
There is a major inflection point at 107.34 – this may hold and produce a double top. The medium-term trend is still bearish in this currency pair, so I will be happy to take a short trade if we get a strong bearish reversal at 107.34.
If the price alternatively gets established above 107.34 that will be a bullish sign.
There is nothing of high importance due today concerning either the USD or the JPY.