Yesterday’s signals may have produced a short trade entry following the small near-pin candlestick / doji on the hourly chart which rejected the resistance level at 111.46. This trade looks relatively doubtful as new higher support seems to have formed at 111.28 so a short trade would only be about 10 pips in floating profit. It would probably be wise to take the risk off the trade immediately by taking partial profit and hope for a strong breakdown through and below 111.28.

Today’s USD/JPY Signals

Risk 0.75%.

Trades can only be entered from 8am New York time Tuesday until 5pm Tokyo time Wednesday.

Short Trade

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 112.09.

  • 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 Trades

  • Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 111.28 or 110.60.

  • 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 I expected both the nearby support and resistance levels would hold. I thought that the most probable opportunity would arrive as a bearish rejection of the resistance at 111.46 after the New York open which would trigger my bearish bias. This was a good call as this scenario did play out. However, the price has hardly moved down from this area yet, with new higher support at 111.28, so the next move seems impossible to predict. I will probably be wisest to be bullish once the price has got above 111.46 for a couple of hours, or bearish if the same happens in reverse below 111.28, as there is no long-term trend to rely upon.

USDJPY

There is nothing of high importance due today concerning the JPY. Regarding the USD, there will be a release of CPI data at 1:30pm London time.

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