USD/JPY Forex Signal

ANALYSIS | 01/01/2016 00:01:01 GMT

Last Thursday's signals pinpointed the low of the day almost to the pip at 110.27, but the bullish action was probably insufficient to justify a trade entry.

Today's USD/JPY Signals

Risk 0.75%.

Trades must be entered from 8am to 5pm Tokyo time Tuesday.

Short Trades

Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 110.76 or 111.46.
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

Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 110.27, 110.04, or 109.59.
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 last Thursday that a pullback to at least 110.76 looked likely, but a strong bounce there could well produce a nice if perhaps small profitable long trade, so I would take a bullish bias if that scenario played out. I was correct about the move down, but it went further than 110.76, all the way down to the next support level at 110.27. The price is now bunching just underneath the flipped support to resistance at 110.58 which looks weak, and as it looks weak, I am not including it as an official key resistance level in today's forecast.

Often when the U.S. is on holiday, as it is today, the Tokyo session sees a strong movement of price. We have no good clues yet though as to which direction this is more likely to be, as there is an absence of any real strong trend anywhere. In this case, taking the first strong rejection of a key level might be a profitable approach.