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I’m going to begin the day today on the US Dollar versus the Japanese Yen [USDJPY]. I’m going to start all the way out here on the Weekly Chart and get a longer term perspective for this currency pair. The first thing I’m going to do is scroll back in time so we can see some history for the USDJPY, going back in time, all the way back to 2007, on the left-hand side of the chart.
Highest high we see on the top left-hand side of the chart is into June of 2007. Taking Fibonacci from that high down to the lowest low on the right-hand side of the chart. That’s the first thing I want to point out. This long down trend and the Fibonacci retracement level is measured within that downtrend put the .618 Fibonacci retracement level at 105.56. That’s the red horizontal line that you see going across the center portion of the chart. 105.56 is the .618 Fibonacci retracement level of this downtrend.
Now, let’s take that back to current time. All the way back to current time and we can see the long uptrend we’ve been in. It started all the way back in 2011. It started moving higher. It continued moving higher. And most recently, in the past few weeks, we’ve seen the challenge of that red horizontal line at the very top of the chart at 105.50, into that .618 fib from the Weekly Chart. So, very interesting there. That’s where our current resistance is holding for the USDJPY from the Weekly Chart.
Now let’s take that information down to the Daily Chart. And again, there’s that red line at the very top of the chart and you can see the market held as resistance there and now has fallen right back down. The next thing I want to look at is here on the Daily Chart. I want to take Fibonacci measurements from the low here where the black X is in the middle of the chart. From that low. Before it began the most recent leg of the uptrend, we were in some consolidation. Some contraction here. Lower highs. Higher lows. It made the last low and started breaking out and moving higher again in the direction of the long-term uptrend.
So, I’ve taken Fibonacci from that low X right here to the current high. And in doing so, we find the .382 Fibonacci retracement level at the blue-shaded area here at 102.00. We’ll call it 102.00 to make the price even and for us to easily recognize it. The blue-shaded area. The .382 fib of this last uptrend. We can see the current market is holding as support there, so let’s go ahead and zoom it on down to the 4-Hour Chart. And as we get down here to the 4-Hour Chart, you could see that .382 Fibonacci retracement level actually sits closer to 102.04. That’s where the current market has held as support today.
So, that continues to be our support for the day today. Any challenges of that .382 fib, the blue-shaded area becomes support today and potential to bounce it up. I don’t know if we’ll see another challenge of that, but definitely something to be aware of if it does make another challenge of the 102-level and that blue-shaded area. Anything underneath that, of course we’ll look for the continuation of the downward slide. Now that we’ve broken underneath this support here, yesterday we were looking at support into the pink-shaded area. It hit right about the 103.30-level. We saw a little bit of a bounce up. It hit 103.30. We went back up towards the 103.55 or so level.
So, if you were in a trade from the 103.30 or even a spike down into the low-103s, you saw about 20 to 25 pips on that bounce. My personal perspective is when I see 20 to 25 pips, I move my stop to break even. So, that would have been what my strategy would have been there. We saw 20 to 25 pips on the first bounce and then it turned right back around and started going back down, breaking underneath the pink-shaded area and continuing to pressure lower.
So, that same pink-shaded area that we studied yesterday in the Trade Room as support. Follow it back in time. We could see historical resistance and support along there. Now that we could see that we’re underneath there, now that becomes our resistance. So, let’s go ahead and put a couple of arrows here. 102.95 all the way up to 103.30 is our current resistance. Anything back above 103.30, we’ll likely look for a turn back higher again. So, if you’re looking for a selling opportunity today, the pink-shaded area becomes your best, most likely opportunity to sell it. If you’re looking for a buy scenario, down towards the blue zone or a break back above the pink-shaded area becomes your most likely buy scenario for the USDJPY.
Taking a look at the Forex Black Book, it is bearish right now. We could see the bright red trend bar. That is a reflection of the most downward movement that we’ve seen over the past several weeks from the highest high into the green-shaded area and that red line at the very top of the chart. We saw the first leg dip to the pink zone, a little bit of a bounce, the second leg pushing down to the pink zone, very limited bounce, and now the break underneath it seeing that bearish movement. Again, with the Forex Black Book, you’d actually like this to go up before it goes down again in the direction of the red trend bar.
So, we’d actually like to see it challenge the pink zone, find resistance, give us a red arrow, and start going back down, similar to what happened here. It found support into the pink zone, bounced back up, found resistance. You see four red arrows develop up here at the top of the chart, and then it started working its way back down. So, with the Forex Black Book, a challenge of the pink zone, new red arrows, give you an opportunity to sell in the direction of our current trend bias for the Forex Black Book. And that also becomes your technical strategy for the day today. Selling into the pink-shaded area, similar to what we see over here on the left-hand side of the chart, as resistance. Looking to target back to the blue zone or lower. The only thing and the risk in that scenario is that it breaks back above 103.30 and begins pushing back higher again for the USDJPY.
