USD/JPY Forex Signal: Bearish Inflection Just Below ¥138
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be taken before 5 pm Tokyo time Thursday.
Short Trade Ideas
- Sell entry after a negative price action reversal on the H1 timeframe and the next touch of 138.39 or 139.00.
- Set the stop loss one pip above the current swing high.
- Adjust the stop loss to break even if the transaction is 20 pips in profit.
- When the price reaches 50 pips in profit, take 50% of the trade as profit and let the rest of the position run.
Long Trade Ideas
- After a positive price action reversal on the H1 timeframe, there is a long entry on the next touch of 137.39, 137.06, or 136.53.
- Set the stop loss one pip below the current swing low.
- If the transaction is 20 pips in profit, adjust the stop loss to break even.
- When the price reaches 20 pips in profit, take 50% of the trade as profit and let the rest of the position run.
The simplest way to see a typical "price action reversal" is for an hourly candle to finish with a higher close, such as a pin bar, doji, outside, or even simply an engulfing candle. You can profit from these levels or zones by observing the price activity at the specified groups.
USD/JPY Analysis
After the Chair of the Federal Reserve's speech before the US Senate yesterday, the technical and fundamental picture in this pair has grown significantly more positive, leading analysts to forecast a terminal US interest rate of around 6%, a significant upward adjustment. After these remarks, the US Dollar strengthened significantly, with the US Dollar Index breaking over 105 and a confluent strong resistance level to trade at its highest price in more than three months.
The US Dollar gained ground across the board, although it is worth noting that the most significant gains were achieved versus more "risky" currencies such as the British Pound and commodity currencies (AUD, NZD, CAD). The Yen has lost value but has held up better, most likely because rising Fed rates raise the likelihood of a recession and, as a result, contribute to a more general risk-off attitude, which supports the Yen.
We had a big upward advance followed by a negative reversal just below 138. Nonetheless, we continue to observe some short-term price movement that suggests bullishness.
I believe we will see another up day in this currency pair, but I doubt it will be significant. As a result, I believe the greatest trading chances today will be long trades from any bullish reversal we see following a pullback to any of the suggested support levels.
A solid employment report and projection in the United States later today will almost certainly drive the US Dollar further higher, so keep an eye on the data releases during today's New York session.
Traders may discover that being long the US Dollar versus the British Pound or other commodity currencies is more profitable than being long the Japanese Yen.
In terms of the USD, the ADP non-farm employment change prediction will be released at 1:15 pm London time, followed by Fed Chair Jerome Powell's hearing before the House of Representatives at 3 pm, when JOLTS job openings data will also be released. There is nothing significant due today in terms of the JPY.