Yesterday’s signals produced a profitable short trade following the bearish doji candlestick which rejected the resistance level at 111.46 and gave about 40 pips of profit.

Today’s USD/JPY Signals

Risk 0.75%.

Trades may only be entered from 8am New York time Thursday until 5pm Tokyo time Friday.

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 Trade

  • Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 111.46.

  • 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 we were likely to either see the price breakout above 111.46 which would be bullish or break down below the swing lows just above the round number at 111.00 which would be bearish. This was a good call as both of these levels were pivotal, producing both the swing high and swing low of the day.

We now have a firm bullish breakout above 111.46 and the U.S. Dollar is being bought, and we have an increase in volatility here, so it is worth taking more of an interest in this pair now. This is logical as we approach the Bank of Japan’s month guidance which is coming during the next Asian session. Trading should continue to be lively once that input comes but direction is unpredictable. The resistance at 112.10 has been strong for a long while, so if the price gets established above it later that would be a very bullish sign.

USDJPY

There is nothing of high importance due today concerning the USD. Regarding the JPY, the Bank of Japan will be releasing its Monetary Policy Statement followed by the usual press conference late in the Asian session. The Governor of the Bank of Japan will be speaking at 8:55am London time.

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