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Transcript of Video
I’m going to get started today on the US Dollar versus the Japanese Yen [USDJPY]. Starting here on the Daily Chart, currency has been in an uptrend for quite some time. We could see it going all the way, bottom left-hand side of the chart, back into June and July of 2014. Saw the first leg of the uptrend. Take it here into the 110-level. A little bit of a pullback right here, coming back down into the 105s, and then the second leg of the trend pressuring much higher as it went from the 105s, all the way to the top of the chart, into the 121s at the top of the chart.
So, a substantial uptrend for this currency pair. Within that second leg of the trend, we really didn’t see any kind of pullback or retracement. It was just a pretty much straight shot as it continued to pressure higher. There was a slow period right here, where it didn’t move up very fast, but it was still moving in the direction of the trend. Even a period here, where it went into congestion and a little bit of a range here before continuing in the direction of the trend, pushing back to the 121s.
This last three days or so has been the most substantial. Four days has been the most substantial pullback we’ve seen since going all the way back here into September and early October for the USDJPY. So, very interesting here. During the Trade Room yesterday, placing a pending buy order down into this area of congestion and into our support, the orange-shaded area that we see right here. If you also did that buy order from the orange-shaded area, you’re now sitting with profit. It would be my suggestion you protect that trade from going negative again by moving your stop to break even or better. We’ll see that on the 4-Hour Chart when I get down there in a moment.
Forex Black Book is green. You could see that down here at the bottom, giving us a clue of course or another piece of evidence that the trend is up. We don’t really need that to see that, but that is our secondary piece of evidence that the trend bias is to the upside. If you’re looking at the Forex Black Book, of course on the 4-Hour Chart you’re going to be looking for a new green, buy signal for this currency pair if you’re looking to enter based on the Forex Black Book.
Let’s go ahead and take it on down to the 4-Hour Chart. And as we get down here, we could see there is that buy order that sat down there just above the orange-shaded area. I believe the buy order was right around the 117.95-level or so. We’ll see that. Let’s pull up the terminal. I think we could see that here. Yeah, 117.95 was the buy order on the currency yesterday. Took a little bit of a dive. Our stop loss was underneath the low down here and you could see now we’re into profit. We’ve actually seen a little bit more profit than what is showing right now, as it pushed back up into the purple-shaded area.
Let’s just measure a little bit here. We’ve seen upwards of 80 to 90 pips on the trade if you decided to take that. Still in profit, so it’d be my suggestion, as you could see, I’ve done here. The red, dashed line represents my stop. It’s into profit. I cannot lose on the trade. So, the question is now what’s going to happen today. Well, if we go back in time, we could see a good deal of resistance into the purple zone. So, obviously that’s where we’re finding our resistance today. What we’d like to see, if you’re in the buy, would be a push back above here because we know historically, if it gets above 119.0, above that purple-shaded area, we likely look for it to continue to go back to the green zone or maybe even a turn back in the direction of the trend and go much higher.
So, right now we need it to get through 119 if we’re going to see further profit on the buys from the orange-shaded area. As long as it stays underneath it, of course we’re finding resistance as we did back here on the left-hand side of the chart. As always, I would suggest protecting profit if you’re sitting with it. If you didn’t buy it yesterday, even another dip back down here, we could see over here on the left-hand side it took several attempts. It dipped down, even into the bottom of the orange-shaded area before returning in the direction of the trend. So, don’t give up on this yet. The trend is still up. I don’t think any of that changes yet, unless it breaks under the orange zone. If it gets underneath there, then we might look for a change in the price action, but for the time being, I’m looking for something similar to what we saw over here on the left-hand side, between the orange and shaded area.
So, buyers, the orange zone is your spot. If it comes back down there, I don’t see a problem with buying it again, using appropriate risk strategies, looking for it to go back up in the longer-term trend. So, let’s put another arrow down here. This is our buy zone, just like it was over here on the left-hand side. Does it mean it’s going to continue to find support? I don’t know. It could break underneath, but at least it provides us a better lower-risk buy. Buying right now not a good idea. Buying down here in the orange zone a much better idea for the USDJPY.
Now, if you’re one of the people on the other side of the market that thinks that this is about time to reverse, then of course the purple zone is something interesting for you. We’ve seen historical resistance here. This is a place of historical resistance and current resistance, between 118.50 and 119.00. It’s about 50 pips wide, so the higher you get in there lowers your risk. The stop loss for that would be above 119 if you’re deciding to sell this because if it breaks above here, I think we are looking for it to go back at least to the green-shaded area, so you’ll want to pay attention to that if you decide to sell this. A break above the purple zone goes much higher, so you want to use appropriate risk strategies if you’re going to do that.
Let’s take one more fib. You see a couple of upward fibs on the previous uptrends. Let’s take one more fib from the highest high on the chart, down to the current low. And very interesting there. Puts the .382 Fibonacci retracement level right at the top of the purple zone at 119.11. Again, that’s giving you a clue to resistance here and that if it’s going to continue higher, we’re going to need to see a breakout above the purple zone. As long as it stays within it or under it, we could see a dive back down here towards the orange zone.
So, buyers from yesterday’s Trade Room holding profit, looking for it to break above the purple zone and go higher in the direction of the overall longer-term trend. Not this little downtrend here, but the overall longer-term trend. That’s the buy scenario that I’m holding. If you’re selling, selling here in the purple zone, targeting the orange zone or lower becomes your opportunity today for the USDJPY.
