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I’m going to begin the day today on the US Dollar versus the Japanese Yen [USDJPY]. Starting here on the Daily Chart, over the past several months, going back to June of 2013, we could see that this currency pair has been in an uptrend, creating higher highs and higher lows. However, over the past several weeks, and we start over here into the end of 2013, beginning of 2014, right there at the beginning of January, we capped out at the highs into the low 105s. 105.25 or so.
Then it started working its way back down, pushing all the way back down here into the 101.0-level. The blue-shaded area here in the middle of the chart. And since then, we’ve just been at a period of congestion, finding support, and now we see a rally higher. Over the past several days, it broke above the last resistance highs and now has come back down to test those highs as support.
These last resistance highs in the green-shaded area go between 102.50 and 102.70, so there’s about a 20-pip shaded area highlighted in green representing these last two resistance highs or last several resistance highs. Left-hand side of that green-shaded area, you can also see some support into that area. So, since we’ve broken above it, open and close, candle bodies above that green-shaded area, we’ve now tested back down to it. That now becomes our support for the day today.
Let’s go ahead and zoom it in a little bit here on the Daily Chart so we could see this a little bit easier. Again, there’s our last several resistance highs over here inside this period of ranging or congestion. We’ve broken outside of that range, above those resistance highs. We’ve now hooked back down to the top side of those resistance highs as support. I’ve also taken Fibonacci retracement measurements from the low here at the bottom of our current upward trend, from about the 100.70-level, taking it all the way up to the current resistance high into the 103.75-level.
We’ve seen that fall back, coming back to the .382 retracement level. .382 of that trend range right there – low to high – is right around the 102.60-level. That’s right in the middle of our green-shaded area. So we have the .382 fib, 102.60 right in the middle of the green zone. The green zone representing these last resistance highs now acting as support. So, for the day today, as long as it holds within or above that green zone, I would be looking for opportunities for buying. Buying on dips into support and a continuation of the overall longer-term uptrend and also this shorter-term uptrend channel that we’re seeing develop right now for the USDJPY.
The only thing that changes that would be a breakdown of this green zone. We then begin looking for it back down towards the 102.0-level for the USDJPY. On the rise, a rally higher, of course we’ll be looking for the challenge of our last resistance high somewhere here into the low-103s. A break of those last resistance highs into the 103.30-level or so, we’ll likely look for it back towards 104.0. The purple-shaded area up here. And of course, through there, we’ll look for a challenge of the highest high on the chart back towards the 105.0-level for the USDJPY.
Let’s go ahead and take this information down to the 4-Hour Chart. and again, there’s that retracement back into the Fibonacci level. The .382. 102.60. Let’s bring these arrows a little bit closer to the market. We’ve seen already a dip towards that fib level, and didn’t quite make it exactly to it, but it came pretty close. We could see the resistance highs over here on the left-hand side of the chart helping us identify this green-shaded area as support. Again, staying within here, and again that green-shaded area is 102.50 to 102.70. Staying within or above here, we rally back to the pink zone, the orange zone, or higher as it challenges back towards the 104-level.
Your risk in that scenario is that it breaks underneath 102.50 and begins a slide all the way back down here into 102.0. Forex Black Book trend bar at the very bottom of the chart is green. Gives us a bullish bias. Often times, what we’re looking for is for the market to go down first, which it has been doing over the past day or so. It needs to go down first. Then find support, give us a green arrow, and then start working its way back higher.
If you just go back in time along this current trend, where does the green arrow show up? I know the trend bar was red back here on the left-hand side, but what I’m looking for is where did the green signal arrows show up. Of course during this time, when it was red, you were looking for red signal arrows and every time it gave you a red arrow, you would’ve sold it. Well, here we saw green arrows after a dip low. It dipped lower, green arrow, went up. Dipped lower, green arrow, went up. Dipped lower, green arrow, went up. So, what are we looking for now? Dip lower, green trend bar. We need a green arrow. That’s likely going to begin the next phase of the uptrend for the USDJPY.
Let’s take one last Fibonacci retracement measurement. I’m going to go from this low right here at the very bottom of the chart into the blue zone to the current resistance high. And in doing that, we find the .382 Fibonacci retracement level at 102.77. That’s where we currently are sitting at the recording of this video. So, we see the .382 of the shorter range sitting at 102.77. We see the .382 of the longer range at 102.60. So it’s likely that we’re looking for support between 102.60 and 102.75 or so. The Fibonacci levels. The green-shaded area.
As long as we hold within or above here, I’m looking for buys on dips into support. Challenges back to the pink, the orange, or likely back towards the 104-level for the USDJPY today. Your risk is that it breaks through here. Your stop placements are just underneath the 102.40-level, and you look for the continuation higher for the uptrend on the USDJPY today.
