USD/JPY Forex Signal

Yesterday’s signals were not triggered, as there was insufficiently bullish price action at 112.19. However, the nearby support and resistance levels were correctly identified, and have capped the price over the past 24 hours in both directions.

Today’s USD/JPY Signals

Risk 0.75%.

Trades must be taken from 8am New York time until 5pm Tokyo time over the next 24-hour period only.

Short Trades

• Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 112.65, 112.88, or 113.02.

• Put 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 Trades

• Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 112.19, 111.43, or 111.31.

• Put 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 price had been falling quite strongly since the week began as U.S. markets have sold off to touch new long-term low prices, sending money flowing into safe havens such as the Japanese Yen. I noted there was still good bearish momentum, but the area below at 112.19 had acted as strong support for a while, so the price may not be able to get any lower than that, at least over the next day or so. I was bearish below 112.65 until 112.19 is reached.

This was a great call as this is exactly what happened: the price continued down to 112.19 but no further. The resistance has held, but it is looking more likely that we will have a double or even triple bottom at 112.19 which holds. However, there is plenty of resistance below 113.02 so it is hard to see the price getting much higher. I think a consolidation between 112.65 and 112.19 remains likely until the FOMC releases due later, which might push the price anywhere.

Regarding the USD, there will be a release of the FOMC Economic Projections, Statement, and Federal Funds Rate at 7pm London time followed by the usual press conference half an hour later. Concerning the JPY, there will be a release of the Bank of Japan’s Monetary Policy Statement followed by the usual press conference towards the end of the Tokyo session.