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I’m going to begin the day today on the US Dollar versus the Japanese Yen [USDJPY]. Now, over the past several weeks and months, we’ve been studying a range that developed here for the USDJPY. The range here on this chart is outlined by the red box that you see here on the chart. The bottom of the red box, the blue-shaded area represented support within that range, and that was down around the 101.0 to 101.30-level. Down into the blue zone, we saw support and opportunities for buying over the past several weeks and months.
Then the market started moving higher and over the past same timeframe, we’ve seen resistance. The purple and the green-shaded area for the most part holding a majority of our resistance with one exception really; is this timeframe all the way back here at the beginning of April, where we saw the market push through the green-shaded area, through the top of that red box, and push all the way up here to the orange-shaded area and into the 104.00-level.
And interesting to see today. We could see the market has pushed through the green-shaded area, through the 103-level again, and now challenging that same historical resistance from all the way back in April of this year. The question of course is what’s going to happen now. Well, last time we were here the evidence shows that there was resistance and potential reversal. Again, the last time we saw it challenge this orange-shaded area, it was a pretty strong bullish move. The market was moving up pretty aggressively, and then all of a sudden came to a complete stop right here, just underneath the 104.0-level.
Well, that’s where we are again today. So, if you’re looking to buy this currency pair or if you’re holding buys, this is your target for profit or target of resistance. I don’t suspect that you’re looking to buy it today, as it challenges this resistance, because the history shows that it could fall back down off of this level. If you’re looking to buy this currency pair, it would be best off looking for a retracement back down first to give you a lower risk, higher reward opportunity. The other option here into this orange-shaded area is now watching for clues to resistance and then of course reversal for the USDJPY, and we’ll be looking for that here into this orange-shaded area, going between the 103.85 and 104.12-level that’s highlighted here in orange. And it’s highlighted like that because of what happened the last time we were in this area.
If you’ve been holding buys as I’ve been suggesting for the past several days and weeks in the Trade Room and in these videos, if you’ve been holding buys, then of course you’re protecting profit now because this of course is your profit target. If we can break through here, of course we will look for the continuation of the uptrend, pushing to the next area of resistance, which is the blue-shaded area, sitting up here closer towards the 105-level. So, let’s just put a couple of arrows here. Well, let me zoom in real quick. That’ll give us an easier way to see this.
Let’s zoom in like this and let’s put a few arrows here that represent our expectations for the day today. Now, we already know that this is likely to see some resistance, and over the past 24 hours we’ve seen the market shoot up here, stop, come to a compete stop, and find resistance here. So, we already know resistance is there. The next resistance will be the blue-shaded area, up there closer towards the 105-level into the upper-104s. What that’s going to mean is that it will need to breakout above this orange-shaded area. We’ll call it 104.00, 104.12. That’ll be the breakout that it needs before it’ll continue that pressure higher. And if it does reverse, our target for support will be back to the green-shaded area, back into the 103.25-level or so. And again, that’s where our historical resistance now going to act us support becomes.
Fibonacci-wise, we’ve taken a few Fibonaccis in the Trade Room over the past few days. Previous fib from the high that you see on the left of the chart to the current low puts the .886 fib at 103.75. We’re already above that. So, that’s not really of a consequence at the current moment. We also take Fibonacci from this high right here. Let me put a little, black X. This high right here down to the last low that we see of that leg, and that puts the 1.618 Fibonacci retracement level at 104.31. A little bit higher and a little bit above that orange-shaded area. So, still some possibilities of it going back up there today. The 1.27 Fibonacci extension of that same range sits down here at 103.62.
All of that though means that it could see retracement. I could even take Fibonacci from the last low here, bottom of the blue trend line, to the current high, which that could change if we see any spikes higher, but that puts the .236 fib of that range back down here towards the green-shaded area into the 103.40s once again. Zoom it out one more time. Let’s go out here like this. Let’s take one more Fibonacci retracement measurement. Let’s go from the highest high on the chart down to this low right here. That’s the low of the range like this, and that puts the .786 fib right on top by the way. Let’s make sure it gets right on that low. Right on top, by the way, of the 1.618 of that last little range there into the 104.30s. That’s right on top of that, right above the orange-shaded area.
So, lots of information about resistance and potential support back down here to the green-shaded area. Again, I don’t think today is a good idea to buy this underneath that orange zone. It will need a break above the orange zone for us to buy it or dip back to the green zone, more likely looking for resistance and selling indicators.
Let’s take it down to the 4-Hour Chart. We already see that we’re finding some resistance here under the orange-shaded area. Hasn’t had any real significant pullback here from challenging the 103.90-level. We’re still going to watch for clues to resistance and reversal. I’ve had that question come up in the Trade Room for the past few days. What does that mean? Looking for clues to resistance and reversal. We’re looking for candlestick formations that imply reversal, such as a shooting star, an engulfing candle. We could be looking for candlestick formations like that, that imply the sellers are taking back control.
We could also look for a change in the price pattern. An uptrend has higher highs and higher lows. We would also look for lower highs and lower lows. All of these are opportunities to look for a change in the price action, which right now is an uptrend. Forex Black Book not likely to change colors since we’ve seen such a strong push higher for the USDJPY, but we’ll watch for that over the next coming weeks and days if we start to see a fall back down. A period of congestion right now. Of course you could begin to outline this congestion on smaller compressions. You could begin putting – in fact, I could just do it like this. It’ll make it easier to do it. We could just outline this period of congestion like this and we could say anything above that little blue box could be looking for the continuation of the uptrend. Anything below that little blue box there, we would be looking for potential reversal. That would be the period of congestion that we’re at, and then of course a breakout would signal the direction that we’re looking for this to go at least on an intraday basis.
So, those are some of the things I’ll be looking for today on the USDJPY.
