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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, we could see that this currency pair has pretty much been range-bound for the past several months. We’re going all the way back to the left-hand side of the chart. Vertical red line over here sits right about January 27, but you could see that red box here on the chart.
Since then, the market has found consistent support down here into the blue-shaded area at the bottom of the range and consistent resistance. Now, when I say consistent resistance, it’s a little bit different than the support. And it’s easy to see the blue zone as support down here, but we’ve seen several areas of resistance. The purple-shaded area here right around or just underneath the 103-level, just into the mid to upper-102s. The purple zone. Even our last resistance is there. We could see several instances finding resistance into the green zone and even one time pushing all the way up into 104. But for the most part, you could see the resistance. Probably would say it’s right here into the purple-shaded area currently for the USDJPY, but the majority of support seen down here into the blue-shaded area.
Over the past several weeks and months, we have been concentrating on a buy bias, buying on dips into the blue zone, capturing profit on every rally higher. Some of them have been shorter. Some of them have been longer, but buying has been our main focus for this pair. And I think, as long as it stays above that blue-shaded area, that will be the continued focus, as it presses towards the top of the range and the top of the box. I would actually like to see it challenge a little bit higher, towards that red line at the top of the chart. The diagonal red trend line.
If I zoom out one time, you could see where that red trend line comes from. It’s coming from the highest high on the chart, connecting with our next major high that we can see here. So, here’s that top red trend line coming down. And we could see that that would be another third attempt into that red trend line, would be the next challenge there as it comes back up into that line. That would also be towards the green-shaded area and the top of our range here for this pair. And I think, eventually, we’ll look for a challenge of that resistance high and a potential breakout and a continuation of the previous uptrend. Otherwise, a break underneath that red box and underneath that range, we look for the continuation lower once again for the USDJPY.
So, let’s go ahead, right here on the Daily Chart, and highlight the bottom blue-shaded area. We’ve been talking about that. Anytime it breaks underneath it, we’ll look for it to go lower. Green-shaded area is the top of the range. Anytime it breaks above it, we’ll look for the continuation of the uptrend. Staying underneath it, potential continuation of the range, especially as it challenges there into that red trend line.
Now, that’s the outer limits of the range. There’s shorter interior limits. Of course we’ve already talked about the purple-shaded area as the limit of resistance. The current resistance that we’ve seen here for the USDJPY. And right now we’re seeing the market challenge our current support, which is this pink-shaded area. 101.90s, 102-level. That’s where we’re currently finding our support for the USDJPY. I’ve also taken Fibonacci from our last support low, all the way down here, underneath the blue-shaded area to our current resistance high. That puts the .382 Fibonacci retracement level right at 102.03. Top of the pink-shaded area. And that’s where we’re currently, yesterday and today, finding support. Top of the pink-shaded area.
So, it’s my expectation that our overall bias today would be for the buy side. Think of this pink-shaded area kind of like a brick wall, a price floor, or support for the USDJPY. As long as it stays above that brick wall, above that support, above that barrier that’s in the market, there’s a higher expectation that we’re looking for bounce off of there for it to go back up. And only if it gets underneath it would you expect it to go lower. Let’s put one more arrow here. If it gets underneath it, would you expect it to continue back down towards the blue-shaded area. Remember: a downtrend has lower highs and lower lows, and an uptrend has higher highs and higher lows.
Well, if you just take a look at our most recent price action here for this pair, and I could just take a quick trend line and put it in here like this, we could see higher lows. And if you just take a quick trend line and put it in here like this, you could see higher highs. So, we have higher highs, and I’m just drawing them in there in a general fashion so you can see what I mean by that. Higher highs and higher lows. So, right now we are in an uptrend. So, since we’re in an uptrend, we’re testing into support. We’re testing into a Fibonacci retracement level. .382 fib right around 102. We’re testing a critical price level – 102.00. We could see that the Forex Black Book trend bar is green, giving us a buy bias. All of that pointing to the buy side.
So, for me, today, it’s a buy into support. Buy on dips into support opportunity here for the USDJPY. And no reason at the current moment to sell this currency pair. Only if it breaks down through that barrier, under the pink zone would I even consider a selling opportunity on the USDJPY. Let’s take that information down to the 4-Hour Chart. There’s all that same information. We see the rising lows. Remember: higher highs and higher lows, which is the overall bias here for this pair, is an uptrend.
Now, I know we have, over the past few days, seen a little bit of downward pressure here, and there’s shorter-term trends and longer-term trends, but what I would expect here, into this support, which is actually matching up with the resistance is that the buyers will now – the overall buyers will now – look for a new opportunity to buy at a lower price. Remember: if you’re going to buy it, you want to buy low. You want to buy into support. So, I would expect that right now there’s potential accumulation of buy orders coming in, as we look for the buyers to take back control and drive it back up in the longer-term trend.
The buyers allowed the sellers to drive it back down into support, giving them another opportunity to enter for a buy again. So, that’s the expectation I’m going to follow today. Looking for buys into the support. Zoom it out. You could see that dip. Just like over here. It dipped into support and then rallied back higher. We’re dipping into support. Now we’re looking for it to rally back higher. Forex Black Book trend bar is green, as I mentioned a few minutes ago. Of course a new green buy arrow would give us a reason to enter this if you haven’t already.
You could see over here, where the green arrow came in and the market went up. There are some green arrows all the way down at the bottom of the trend also, and then it went up. Now, over here, the trend bar was red, but now that it’s green, if you get a green arrow into this pink-shaded area, easily gives you an opportunity to buy it in the direction of the overall bias. The Forex Black Book trend bias gives you an opportunity to buy into support. I always say that in my Trade Room. Buy low, sell high. Buy support or sell resistance. Right now we’re not into resistance. We’re into support.
Yes, there probably will be a little bit of pushback, a little bit of resistance here into this yellow-shaded area, which is into the 102.25, 102.35-level, so that’s why, if you’re going to buy it, you’re going to want to be as close as possible to this pink zone, giving you some room to go before it reaches that yellow zone, and then of course, if it breaks through that yellow-shaded area, which we just talked about a few moments ago, we’ll likely look for it back to the purple-shaded area up here at the top. And of course, if it’s going to be an uptrend, what do we expect to see? Higher lows and what? Higher highs, which I think will likely be all the way back to the green-shaded area.
So, for me, today, staying above the pink zone. It’s a buy bias, buying on dips into support, looking for those rallies higher, targeting the green-shaded area, all the way at the top of the chart to be our new higher high to be made. The risk in that scenario is that it breaks the pink zone and it goes back down to the blue zone. So, your stops are likely going to be just underneath the pink-shaded area for the USDJPY today.
