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I’m going to get started today on the US Dollar versus the Japanese Yen [USDJPY]. Starting here on the Daily Chart, I zoomed way out so we could see further back in time. We go all the way back to the left-hand side of the chart. We’re all way back into 2012, bottom left-hand side of the chart, into the 79s. We could see 79.50, 70.0, even a dip into the 78s, going all the way at the bottom of the chart.
Now, over quite a long period of time, a couple of years, we saw the beginnings of an uptrend. We went from October of 2012 back here on the left. We made a resistance high in May of 2013. A little bit of contraction here as the market created somewhat of a triangle pattern, a breakout, and then here into the beginning of 2014, we saw a new high being made into 105.
Since then, since the beginning of 2014, the beginning of this year, basically where this red, vertical line is on the right-hand side of your chart, we have been ranging for this pair. And clearly left-hand side was an uptrend and now we have not been trending here for this pair.
Let’s go ahead and zoom it in now a little bit. Take a closer look of that area. Since January of this year, we’ve been kind of bouncing around in a bit of a range. I’ve got a red box here that highlights that range. The top of the box: the green-shaded area. The bottom of the box: the blue-shaded area.
Over the past several months and weeks, I’ve been talking about buying into the blue zone. Every time it dipped down there, my suggestion in the Trade Room and in the videos was for buying on dips into support. If you’ve been following that suggestion, it has clearly been a profitable scenario. Every time it dipped down there, buying. And once again, just several days ago, we could see the market tapping down here into 101.30, just into 101.00, and we could see that bounce right back up into the 102s, towards the 103-level as it continues to pressure higher.
Also, since doing that, we could see I’ve also put a blue trend line coming down from the top of the chart. Highest high on the chart, connecting with this high right here in this orange-shaded area. So, the most two significant highs here connecting that blue trend line and recently we have charged and opened and closed, broken above that blue trend line. It could be a sign of the next move for this pair.
This pair. Shorter-term trends have been applied here, but in a longer-term sense of the word, I don’t think this has really been trending. When we talk about trending, I’m thinking about up trends or down trends. I don’t think this pair has been trending. I think it’s been ranging between inside this red box, between the blue zone and the green zone. So, what we would like to see of course would be a return of a trend, a breakout to the top side, above the box and the green-shaded area, and the return of the uptrend, or maybe even a break under the blue-shaded area at the bottom of the red box and a return of the downtrend. But really this pair in the longer-term sense has not been trending. It’s been in a range, and we’d like to see a breakout eventually of this range so we could see some more trending behavior take place.
For the people that bought it down here into the blue-shaded area, you’re holding profit, looking for that breakout above the green-shaded area and the red box that you see here on the chart. If you’re not in a buy, there has been some short-term opportunities to buy it on dips into support and the top side of that blue trend line, but otherwise there’s potential that you could be looking for clues to resistance and reversal and selling opportunities the closer you could get to 103.0.
Let’s go ahead and zoom it in one more time here on the Daily Chart, and the buying opportunities that I’ve spoken about were down here into the yellow zone. If you were in the Trade Room yesterday, you’ll note the fact that I talked about buying right around 102.40. If you decided to go ahead and also jump in at 102.40, you’re now sitting 20 to 25 pips of profit, depending of course on your entry point. 20 or 25 pips of profit. What we’re looking for now, if you bought it at the top of the blue trend line, the yellow-shaded area, is the break above 102.75.
Getting right back above 102.75, where we attempted to get above a few days ago. Opening and close above 102.75, we’ll look for the turn back towards the green-shaded area and the top of our longer-term range here for this pair. If, at any time, whether today or the rest of the week or next week, we see the push above the green-shaded area, 103.25, clearly we’re looking for this to go all the way back to the 104.00-level and the orange-shaded area up here at the top of the chart.
So, some distinct decision zones, and in the Trade Room I often describe each of these colored, shaded areas as a decision zone, where you’re deciding, as a trader, to enter or exit the market. That’s really the only two decisions as a trader that you have to make; is where to get in and where to get out, enter or exit. So, if you entered at the yellow zone, then the purple zone becomes your potential exit, or maybe the green zone if you stay with it. If you didn’t buy it into the yellow zone, you don’t want to buy it right now. You would be buying into resistance, so I don’t think you’d want to buy it right now, but a breakout above the purple zone, 102.75 becomes a potential buy, targeting, again, the green-shaded area.
Those are your decision zones for buying. What about selling? Well, if you’re looking to sell a currency pair, you want to sell into resistance. It provides lower risk and higher potential reward. So, if you’re looking to sell it, this purple zone does become a potential selling opportunity. Not sure I would think it’s good enough yet. I think even a challenge back into the 103.00-level, the green-shaded area, becomes a much better lower risk, higher potential reward selling opportunity. So, I’m not really suggesting a sell here into the purple zone, watching for the breakout and continuation higher. If you’re going to sell it, watch for resistance and reversal more likely back to the green zone or potentially under the yellow zone.
If it gets back underneath the blue trend line, the yellow-shaded area, of course we’ll look for it back to the purple zone or maybe all the way back down to the bottom of the range. So, sellers, the green zone or under the yellow zone. Buyers, the yellow zone or above the purple zone, targeting the green zone. Of course above the green zone, that’s another buying opportunity, targeting the orange-shaded area here at the top of the chart.
Forex Black Book is green, giving us a buy bias. We take that information down to the 4-Hour Chart. We recently have seen a yellow arrow. It’s hard to see because it’s in that golden-colored shaded area, but there is a yellow arrow here on the candle that was tapping just underneath the purple zone. So, as I describe in the Trade Room quite often, buying underneath resistance not really your best opportunity, but if you decided to take a buy, you’re starting to see it come around for you. Right now of course you’re looking for that push back above the purple zone, as mentioned, above 102.75.
We don’t have a green arrow. Forex Black Book. So, it would either need to come back down or settle out between this purple or yellow-shaded area for quite a bit longer before we could get a green arrow for the Forex Black Book today.
