Today’s USD/JPY Signals
Risk 0.25%
Trades must be entered before 5pm Tokyo time Friday.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of ¥152.93, ¥153.35, or ¥153.72.
- 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 Ideas
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of ¥152.49, ¥152.15, or ¥151.61.
- 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.
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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
This currency pair is looking bullish: as a trend trader, I respect 50-day breakouts in the two biggest currency pairs, the EUR/USD and the USD/JPY, as these major pairs have a track record of profitably respecting their long-term trends. We see the price making a firm upwards movement over the past few days to test the near 2-week high price.
There is strength in the US Dollar, which has spent a long time bottoming out, and the US Dollar Index (DXY) is now trading above its long-term resistance level at 96.80, which is a bullish sign, supported by rising US treasury yields.
There is weakness in the Japanese Yen, which will again be subject to a huge stimulus package, although that will not be directed at the Yen. However, it is likely to have the effect of giving a tailwind to the short Yen trend which is currently a major feature of the Forex market.
Like many trend following hedge funds, I use 50-day highs or lows of closing prices to enter trades in this currency pair, as long as the 50-day and 100-day simple moving averages are ordered in the direction of trade, confirming the shorter-term momentum within the trend.
Zooming in to the technical picture, the fact that the price seems to be getting established above the former resistance level confluent with the half-number at ¥152.50, is a bullish sign.
I think it would be wise to enter a long trade from a bullish bounce off ¥152.49.
If the price gets established below that level, it might suggest a deeper pullback will need to happen next.
There is nothing of high importance scheduled today concerning either the USD or the JPY.
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