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I’m going to get started today on the US Dollar versus the Japanese Yen [USDJPY]. Starting on the Daily Chart, there’s two specific areas I want to focus in on. First off, the green triangle pattern that we see down here, bottom left-hand side of the chart. You see the triangle here. Fairly steady highs along the top of that ascending-type triangle and rising lows.
Eventually we saw the breakout above the triangle and the continuation of the previous long-term uptrend. It was in a period of consolidation, broke above there, and now we see it continuing higher after the green triangle. Well, then we see a little bit of a fall down, similar to what we saw over here. A little bit of a fall in the triangle pattern. We see a fall down and now we’re creating a very similar pattern over here on the right-hand side.
Now, always we expect that there’s a possibility that the pattern doesn’t succeed and we see a failure of the pattern, but for the time being, we see it continuing to stay within the period of congestion and within the rising triangle pattern. You could see the trend line – the red trend line – and the lows along that red trend line. We’ve seen much support in this yellow-shaded area. You could even, and I’ve done this the past couple of days, throw in a triangle here to really represent this areas, similar to what we’ve seen over the green triangle.
So, there is that area. You could see the rising lows along the red trend line. The fairly steady highs in the green-shaded area. If I take the triangle back off, you could see those highs in the green-shaded area. So, critical decision points here, and it has been for the past two weeks. We see the support now. We see the support over here. We see support even on the left-hand side and even going all the way back into December.
So, the yellow-shaded area is a critical decision point for the USDJPY. As long as we stay within it or above it, I’m watching for support. Now, I’ve made multiple entries over the past two weeks. Multiple entries as buys and been able to capture profit as it’s rallied back towards the green-shaded area. And once again, I’m looking for buys on dips into this yellow-shaded area, knowing that there is risk that eventually we see a breakdown of the pattern and a continuation lower. But at this point, the risk, the lower risk scenario for my trading is for buying.
The lower risk. That’s really what I’m looking for. If I was to sell it right now and given the pattern that we’ve seen over the past several weeks, we could likely see support and a bounce back higher. So, I don’t want to sell it until it breaks through that yellow-shaded area and that red trend line there. Unless it breaks underneath it, opens and closes. That’s what I mean by a break. Not just a simple, little spike underneath it, but a clear open and close underneath it. Not until we see that do I expect it’s broken. So, as long as we stay within or above that yellow zone, and specifically the last low that we see right here in the middle of that triangle, then I’m looking for buying on support, targeting back to the green zone and maybe even seeing a break of that 102.90-level and the continuation higher like what we see over here on the left-hand side.
Now, again, that could change if we see a breakdown of the pattern. It invalidates the triangle and we likely look for it at least back to the blue-shaded area. If not, all the way back down to the blue trend line and the pink-shaded area. Go ahead and take that information down to the 4-Hour Chart. And again, the yellow-shaded area has been critical over the past several days. We could see the yellow-shaded area. Historical support in here. We could see some resistance on the left-hand side into the 101.60-level. A lot of information about support here.
So, selling right now just not really part of the plan. I don’t really think that selling is the lowest risk, highest reward opportunity. The lowest risk. What’s the risk here? The risk is, again, that is breaks down underneath 101.60 and continues down to the blue-shaded area. So your stop placements go just underneath the 101.50, 101.40-level, and then you look for it to rise and rally back to the green zone as it has for the past several weeks here for this currency pair.
So, I continue to look for buys on dips into support, here into the yellow-shaded area. Once it breaks back above 102, we’ll look for it back into the 102.50s, 102.60s, the green-shaded area. And again, of course, if it breaks above there, we look for it to go higher. Fibonacci from the lowest low that you see here on the left-hand, middle part of the chart. Fibonacci from the low to the current resistance high, which is here – the high into the green-shaded area -, puts the 50% retracement level right here at 101.70. That’s where the current market is sitting.
Now, I know we do see a little bit of difference with the Forex Black Book. A little bit of confusion with the Forex Black Book. We have a red arrow. We have a red trend bar. But definitely showing some caution because of the historical support here. A breakdown of that support, definitely well look for a continuation to the bear side.
But look at this. We’ve seen one, two, three, four. Four times we’ve seen a red arrow through the life of this red trend bar and it hasn’t broken through this yellow-shaded area. So, that’s why I’m showing a little bit of caution. Even though we see the red trend bar, we see the red arrow. The past four times we’ve seen that, it’s had a very difficult time breaking through this yellow-shaded area. So, unless it opens and closes underneath 101.60, I don’t truly have the confidence that I need to take a sell for this to continue to pressure higher.
I think the best opportunities to sell it have been into the green-shaded area over the past several weeks. So, for the day, I’m looking for buys into the yellow zone. Fairly minimal risk just underneath the yellow-shaded area, looking for a target back to the green zone or higher. If we get an open and close underneath the yellow-shaded area and underneath the 101.60-level, I will be out of that buy trade, looking to target back down to the blue zone. And of course a break under the blue zone completely changes the structure of the pattern and we look for it down into the 100-level. The pink-shaded area that’s down here.
A break underneath 101, 101.20, we’re back down towards the 100.0-level, the pink-shaded area, and the blue trend line that we see sitting down here. So, for the day, focused in on buys into support, looking for a challenge back to the green zone and a break higher. The risk is, of course, a break under the yellow zone, back to the blue zone or the pink zone for the USDJPY today.
