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High volatility as Governor Kuroda’s replacement prepares to testify before Parliament.
The yen is a popular asset during turbulent times.
My previous USD/JPY signal on 13th February produced a profitable short trade from the bearish pin bar which rejected the resistance level which I had identified at ¥132.88.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be entered before 5pm Tokyo time Tuesday.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of ¥134.66 or ¥135.79.
- 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 50 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 timeframe immediately upon the next touch of ¥133.22 or ¥131.79.
- 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.
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
In my previous forecast for the USD/JPY currency pair, I wrote that the price would continue to rise towards ¥132.88 where bulls would face a stronger challenge. This was a perfect call, as this is exactly what happened, with a bearish reversal taking place from a rejection of the resistance at ¥132.88.
The technical picture was very bullish last week as the Japanese Yen was in the Forex market’s focus and showing relatively high volatility. This is partly caused by the impending replacement of Bank of Japan Governor Kuroda, with candidate Ueda scheduled to testify before the Japanese Parliament this Friday, where he will face questions about his monetary policy. There is some expectation that a policy shift is likely, which could produce big swings in the Yen. The US Dollar is also in focus with increased speculation that the terminal rate there will be even higher than the widely expected 5.25%. So, there are good reasons to keep an eye on this pair.
The technical picture now has become a little more bearish as this week gets going towards the end of Monday’s Tokyo session, with a first lower high shown below in the hourly price chart rejecting ¥134.50 and the price trading lower from there.
This suggests that the price is likely to keep moving lower, but it could find minor support if it reaches the lows at about ¥133.60. If it gets established below ¥133.50 it will likely continue downwards to reach at least the next support level at ¥133.22.
There is nothing of high importance scheduled today regarding either the USD or the JPY. It is a public holiday today in the USA.
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