Want FULL ACCESS To
ROSS’ DAILY TRADE ROOM?
Simply Click The Get Started Button Right Now!
Transcript of Video
Click Here to receive an email alert when Ross posts a new daily video
I’m going to begin the day today on the US Dollar versus the Japanese Yen [USDJPY]. Starting on the Daily Chart, it’s not too hard to see, zoomed way out so we could see some history, that this currency pair has been in a longer-term uptrend. We started all the way back here into 2012. Bottom left-hand side of the chart, right around the 77.0-level. Climbing over the past couple of years, as it pushed all the way up here, capping out right around the 105.40-level at the top right-hand side of the chart.
Now, if we zoom in a little bit, we could see that over the past few weeks this currency pair has taken a little bit of a dip back down. It’s retraced part of that uptrend. Not a lot, but just a little bit. Come back down, in towards the 102-level. Now, over the past few weeks, we have found support into this yellow-shaded area, and that’s something we’ve been studying in the Trade Room over the past few weeks. The supports seen here in the yellow-shaded area.
We could see we did get one dip all the way down here into the blue-shaded area, down into the 101.0-level, but climbing once again right back in between the yellow-shaded area as support and the green-shaded area as resistance. In the Trade Room yesterday, we also observed historical price action. This triangle pattern developed over here. And the reason I point that out is specifically we see rising lows within that pattern.
Rising lows within that triangle and eventually breaking out to this top side of that green triangle. Right there where that orange circle is, we see the breakout above the top of the resistance within that triangle. Now, the reason I point that out is, if you observe the current market conditions, we see a rising low here, and I’ve put a blue trend line here to represent that rising low. If we see a breakout of our current resistance highs – what’s happened to be highlighted in this green-shaded area – right around the 102.80s, 102.90s, 103-level, we could be looking for a continuation of the previous trend.
So, basically what we would be looking for is something like what we see with this orange circle down here above the green-shaded area, up here at the top right-hand side of the chart. Even if you take another trend line here and place it along the top, within that green-shaded area, you can see very similar action there, where you see steady horizontal highs, rising lows. If it breaks out to the top side of that triangle pattern, represented with the blue trend lines, we’ll likely look for a continuation higher.
The other side of the story though is if it breaks underneath the yellow-shaded area, underneath that bottom blue trend line, and it changes the rising low pattern. We look for a new fall back towards the blue-shaded area or possibly all the way back here towards the pink-shaded area, which is where our longer-term trend line is.
Let’s go ahead and take those trend lines – the big blue trend lines – off of this real quick so we can see all the price action. Let’s go ahead and zoom in one more time. And we can see the yellow-shaded area holding as our support. Green-shaded area holding as our resistance. I actually want to leave this one trend line here, just the one on the bottom. I’m going to make it smaller, so it’s not so predominant here on the chart, and I’m actually going to change the color to red so it’s easier to see.
So, there’s that red trend line representing rising lows. As long as it stays above that red trend line and above that yellow-shaded area, I’m looking for support and rallies at least back to the green-shaded area as our resistance. Now, at some point, we’ll look for a breakout. We’re testing support now. At some point, we’ll look for a breakout. It’s my expectation, with the rising lows, that if we challenge the green zone at some point, we’ll look for a breakout above the green zone and a continuation of the previous uptrend. Very similar to what you see down here – bottom left-hand side, where the orange circle is. A breakout above continued the uptrend.
If it doesn’t do that and we see a change of the trending pattern and a break underneath the yellow-shaded area, our next support of course is 101. That’s the blue-shaded area. 101.0. The blue-shaded area. We have some Fibonacci of a previous trend range. A retracement level. 50% retracement level of our previous trend range sitting there. If we get underneath that blue-shaded area, of course we will target the longer-term trend line and the pink-shaded area.
And if I zoom back out one more time, you can see historically that pink-shaded area. You see the resistance over here on the left-hand side will become potential support. If I zoomed out one more time, again, there’s where that blue trend line comes from. You could see it climbing along the lows within the longer-term trend. So, that blue trend line does become a potential target for support if we break underneath the yellow-shaded area. But so far, over the past week or so, this yellow-shaded area has been able to hold as our support.
Let’s go ahead and take this down to the 4-Hour Chart. And as we get down here to the 4-Hour Chart, you could see the support within the yellow-shaded area really hasn’t changed a lot over the past week or so. I’m going to bring these arrows a little closer. As long as it holds within or above – we’ll call it 101.60 to 101.85, 101.90. As long as it holds above that, we’ll likely look for a turn back towards the green-shaded area as our resistance. Why? Because it has held there for the past several weeks. And of course, as I mentioned, above that green-shaded area we’ll likely look for the continuation of the longer-term uptrend. Back underneath the yellow-shaded area, if it breaks back underneath 101.60, we’re back down towards the blue-shaded area as our next support.
Let’s go ahead and bring an arrow down into here. The blue-shaded area is 101.20 down to 100.91. That’s that blue-shaded area; is our next support. You could see that over here. And of course, underneath there, we’ll likely take a turn back down towards the 100.0-level. Back above the green zone, if we do break above that green zone, I would expect we’re looking for a turn back higher, likely back here into the 104-level.
And I’m actually going to bring this purple-shaded area at the top of the chart over a little bit. And that purple-shaded area, back towards 104. You follow it back in time. You could see the historical supports over here on the left-hand side. That becomes our next potential resistance if we break through the green-shaded area on the top side. So, my expectation within or above the yellow zone, looking for buys with low risk. Looking to target back to the green-shaded area. Your risk is just underneath the yellow-shaded area. And then, if it can break above there, following profit as high as I can.
At this point, not looking to sell it because we’re challenging support that we’ve seen over the past couple of weeks. The only reason I would consider a sell would be a rally to the green zone or a break back underneath the yellow-shaded area for the USDJPY today.
