USD/JPY: Bullish reversal from long-term low
Yesterday’s signals were not triggered as there was no bullish price action when the support level at 107.02 was reached.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be entered from 8 am New York time Wednesday to 5 pm Tokyo time Thursday.
Short Trade Ideas
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 106.72 or 107.02.
- 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 106.43 or 106.15.
- 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 yesterday that was really little going on here, and not really any good reason to be looking to trade this currency pair. I thought that the most interesting thing which might happen here in the near future would be a bearish break to new long-term lows below 106.00, which would be a very bearish sign.
I was very wrong – the price made a strong, sharp bearish move yesterday, threatening to break to new multi-month lows below 106.00, but buyers stepped in once the closest support level to that area at 106.15 was hit. Technically, this could be a very significant development if the bullish reversal holds from there, as it would confirm that the price remains within its long-term range, meaning there is potentially a lot of upside from here.
The resistance at 106.72 looks likely to be strong, so I would still be ready to take a short trade from a reversal there.
On the long side, another test of 106.15 and another bullish bounce there would make a medium to long-term upwards move even more likely as it would produce a bullish double bottom.
There is nothing of high importance scheduled today regarding either the JPY or the USD.