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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, the current price for the USDJPY sits all the way up here at the top right-hand side of the chart into the 101.30s. The last time we were here – we have to go all the way back into July of this year, July 5, 6, 7, when we were back up underneath that price level as resistance. So, over here, we challenged underneath that yellow-shaded area, underneath the 101.30s as resistance, where, in the current time, we’re challenging as support on top of that same price level.
Go back even further in time and we could see some historical congestion around there, where this vertical dashed black line is, back into May of this year. Now, above that price level is really what I want to take a look at, back here into May. If you go above the current price, above the 101s, we go back up here to this red line. The red line sits right around the 101.20-level. Well, if you follow that red line back to the left-hand side, you could see, back in late May, we saw some resistance into that red line and back in here, into early May, we saw some support. So, congestion, resistance, support – all of this back on the left-hand side tells us that that’s our next level of resistance if we see a continuation of the current uptrend. That’s the most important thing I’m trying to point out here on the Daily Chart.
If the uptrend continues, which we’ve been in an uptrend, that would be our next potential resistance, into that red line and the 102.20-level, as it continues to push in the direction of the trend. The Forex Black Book, of course, is green, and that is also implying a bullish bias, or a buy trend, for this currency pair.
Let’s go ahead and zoom it in a little bit here on the Daily Chart so we could see all this information in a little bit more detail. First off, the yellow-shaded area. Follow that back in time and of course that’s that low 101-level. 101.10 to 101.20. Follow that back again and we could see the historical resistance back here. Scrolling back in time, we could see where the market challenged as resistance and support along that red line. So, that is an important price level. The yellow-shaded area. Finding support here, we look for a challenge back into that red line. If it breaks underneath the yellow-shaded area, breaks underneath the 101.10 level and the bullish trend line, we’ll likely look for a continuation back down as it pushes back down into the green-shaded area.
Follow the green-shaded area back in time; that’s the mid to low-100s. 100.50 down to 100.25 is the green-shaded area. We could see the last time we were here we found some resistance before breaking through there. We can see over here, into September, we found some resistance here into that green zone. We go all the way back here into July; we see resistance. So, that would be our next support on a breakdown of our current support in the yellow-shaded area.
So, our expectation today will be support into the yellow-shaded area and above the blue bullish trend line that we see here. We’ve been going up ever since bottoming out down here into the 97.0-level. We’ve been rising, finding dips into support, rallies into new resistance. Dips into support, rallies into new resistance, and that’s the same thing we see happening currently, where we’ve seen a rally into resistance, now dipping into support. The expectation is that we find support above this yellow-shaded area, above the blue zone or blue trend line, and continue towards that red line at the very top of the chart. The only thing that changes that expectation would be a break of that yellow-shaded area and the blue trend line. We look for a reversal for this to go back down again.
Let’s go ahead and take all of that information down to the 4-Hour Chart and get it back to current time here. As we bring it back to our current timeframe, this is what we mean by the uptrend. We can see higher highs and higher lows along this blue trend line. I could take a couple of black X’s and just put it in here and represent where our last several lows have continually gotten higher within the uptrend. And this also is a good illustration of where we’ve seen the market rally to a new resistance, and I’ll use a trend line to show this. Rally to a new resistance. I’m going to change that trend line to the red color. And doing so, we can see rally to a new resistance in the pink zone, fall to the purple zone, rally to a new resistance here into the green-shaded area, fall to the pink-shaded area, find support, and made a new high.
It didn’t have that dramatical fall back from the yellow-shaded area. We saw several hours finding resistance under the yellow-shaded area. Didn’t fall back and now we broke and made a new high. Well, we’re seeing that similar pattern though develop now, where we’ve now seen a fall to support. So, if you take these last sections as a clue of what we might expect, as we dip close or towards the blue bullish trend line, we would expect support. Again, here into the yellow-shaded area, into the blue trend line. As long as it finds support above it, we look for buying opportunities on these dips into support and a rally, once again, back to the red line and the 102.20-level at the top of the chart. The only thing that changes that outlook would be an open and close underneath the yellow-shaded area, likely underneath 101.10, and then we look for it to continue back down into the mid-100s, 100.50 or so. Staying above it, again, looking for that next push back in the direction of the current trend – bullish trend – and a push all the way back up into the 102.20-level for the USDJPY today.
