The US Dollar is in a strong bearish trend.
The yen is a popular asset during turbulent times.
My previous USD/JPY signal on 8th March produced a losing long trade from the bullish rejection of the support level at ¥136.53.
Risk 0.75%.
Trades must be entered before 5pm Tokyo time Friday.
- Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of ¥134.83 or ¥135.94.
- 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.
- Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of ¥134.45 or ¥133.01.
- 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.
In my previous forecast for the USD/JPY currency pair, I wrote that we would likely see an up day but that the extent of any bullish move would likely be limited. This was a good call as it was exactly right about what happened over the rest of that day.
We are continuing to see a lot of volatility in the Japanese Yen, which until very recently was consistently one of the weakest major currencies and clearly in a bearish trend, given tailwind by the Bank of Japan’s constant signals that it will maintain its extremely loose monetary policy.
This pushed the price to close at a long-term high above ¥137.50, prompting some trend traders to go long, but since that point the price has just plummeted, losing more than 200 pips within just a couple of days.
The bearish momentum here seems to be continuing, although there are signs that the decline is being halted by the firmness of the support level at ¥134.45. This is very likely to be today’s pivotal point. If we get two consecutive lower hourly closes below that, the price might fall quite quickly as low as ¥133.00. However, if the level continues to hold as support, we will probably see a weak rise from that area.
I would be more excited about the short trade scenario than the long trade scenario.
Regarding the USD, there will be a release of US unemployment claims data at 1:30pm London time. There is nothing of high importance due today concerning the JPY as it is a public holiday in Japan.
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