USD/JPY: No long-term trend
Yesterday’s signals were not triggered, as none of the key levels were reached yet.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be taken between 8am New York time Tuesday and 5pm Tokyo time Wednesday.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 107.86 or 108.23 or 108.54.
- 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
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 106.43.
- 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.
USD/JPY Analysis
I wrote yesterday that we were seeing a consolidation pattern playing out because both currencies were strong as safe havens in the risk-off environment which was dominating markets.
I took no directional bias.
This was the right call as the price has continued to consolidate. The dominant paradigm in the market these days is risk on vs risk off and so both currencies tend to be relatively strong or weak at the same time. This means we will tend to see little directional movement here and low volatility.
Due to the consolidative environment, I am prepared to take either long or short trades from reversals at key levels as they occur.
It is worth noting that the consolidation is looking a little more bullish today, so it will not surprise me if the price gets established later above the resistance at 107.86. If it happens, this will be a weakly bullish sign.
Regarding the USD, there will be a release of Retail Sales Data at 1:30pm London time, followed by testimony from the Chair of the Federal Reserve before Congress at 3pm. There is nothing of high importance scheduled today concerning the JPY.