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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’ve zoomed way out to give us a wider perspective of this currency pair, and it really gives us a good look at what’s been happening for quite some time right now on the USDJPY. We go all the way back into January, the end of January. We could see that the market went into a period of ranging. It wasn’t a trending market
If you look to the left-hand side of that red, vertical line, you could see a trending market, where the market went into a full up climb from down there into the 9600-level, all the way back up into the 105s. So, a pretty decent trend on the left-hand side of the red line, and then, January, we just went into this right.
Right now we’re kind of stuck right in the middle of the range. We’re not down towards the bottom in the blue-shaded area. We’re not towards the top, where that red trend line and the purple and the green-shaded area is. We’re kind of stuck right in the middle of that range. So, at this point, it really could go either direction. The buyers could take control and drive it back to the top of the range. The sellers could take back control and drive it back to the bottom of the range. And it really could go in either direction, so what we need to do is wait for the right timing to trade this currency pair.
Now, over the past several weeks, we’ve been focused in on the buys. We’ve been closer to the bottom of the range. We’ve been down there, close towards the blue-shaded area at the bottom of the range. And in the Trade Room, we’ve been buying this currency pair on dips into support. Blue zone, even into the pink-shaded area, we’ve been buying this currency pair, looking for the rise back to the top of the range. Now, it hasn’t made it all the way back to the top of the range, but still that tends to be the main focus that I have here for this currency pair.
You look down at the very bottom of the chart. The Forex Black Book trend bar has turned green, but it’s been green and red, and green and red a couple of times within this period of ranging since January. So, it’s not a confidence booster, but it does give us a direction to focus our efforts in with the Forex Black Book chart.
Let’s go ahead and zoom it in here on the Daily. You could see that a little bit tighter. Look at this. Seven days. We’ll call it seven or eight days here, we’ve just been stuck inside the middle of the longer-term range, here into the pink-shaded area. Now, during this timeframe, I’ve been still concentrating and focusing in on the buys, buying on dips into support. Buying into the pink-shaded area, looking for rises and rallies back towards the yellow zone or maybe even towards the purple zone as we look for a continuation of the trend.
Now, I do know that if it breaks out of this period of congestion or consolidation, whatever you want to call it right now in this pink-shaded area, we’ll look for either a break to the bottom side and return back down to the blue zone or a break to the top side and return to the yellow-shaded area. Let’s put a couple of arrows here, giving us some outlook here. A break above 102. We’ll call it that. 102. Open and close above there, we’ll look for the continuation higher, back towards the yellow zone as our first resistance, and then of course beyond that, the purple or the green-shaded area becomes a possible resistance target at the top of the range. On the other side, a breakdown underneath the pink-shaded area, we’ll look for a return back down towards the blue zone.
So, for those of you that are watching Forex Black Book, you’re likely looking for new green arrows on the 4-Hour Chart and buying opportunities. If you’re not using the Forex Black Book, it’s possible you’re starting to use the Advanced Loss Recovery tool. That’s another tool that may benefit trading in this environment. If you’re taking buys into the pink zone, your loss recovery zone is likely going just underneath the pink-shaded area. The loss recovery zone level is just underneath the pink-shaded area, so if it does breakdown, it goes into loss recovery. Remember that loss recovery zone is basically taking this place of what your traditional stop loss would be.
Here, on this platform, you could see there is a trade going here. I have applied the :oss Recovery. We’ve discussed it a couple of times in the Trade Room. We’ll do that again today. It was kind of a trade that we were experimenting with the Advanced Loss Recovery tool to get an idea of how it works, so it was a little bit tighter than it probably should’ve been, but interesting is that it’s still going. So, if it breaks down under the pink zone, our targets are down into the blue zone with the Loss Recovery. If it continues to break above the pink zone, our targets are into the yellow-shaded area for the Loss Recovery. But if you’re not using the Advanced Loss Recovery tool, I still think buying here into the pink zone with the Forex Black Book trend bar being green becomes an opportunity to target back to the yellow or the purple-shaded area. And the only reason I would change that out look is that it breaks underneath that pink-shaded area; you could begin targeting back down towards the blue zone at the bottom of the chart.
Let’s take that information down to the 4-Hour Chart, and we can see a few days ago, it did break above 102. Pushed all the way back up into the yellow zone. For those traders like myself that were buying there, we saw profit into the yellow zone, and then it came back down. If you were protecting profit with a stop loss, then it probably took you out as it came back down to the pink zone. If you added on another trade into the pink zone, you’re probably already now starting to see some more profit as it pushes back above the pink-shaded area.
What gives us confidence that it’s going to continue to go up would be an open and close above the pink zone. If we look back in time, it’s had a difficult time doing that, staying above there. But once we do see an open and close above it, we could see that over here it did push all the way to the yellow zone. So, what we’re looking for right now is a break above 102. Holding above 102, we look for it to go back to the yellow zone. Possibly, at some point in time, breaking above the yellow zone and continuing to pressure higher.
So, if I was looking for a new trade today, I don’t think I would sell it right now. It’s obviously found a lot of support here into this pink-shaded area. I don’t think right now is your selling opportunity. I think if you’re doing anything today, you’re buying and targeting the yellow zone or higher. Only reasons I would sell this currency pair right now would be a challenge back to the yellow zone or pushing underneath the pink-shaded area. And again, for those of you trading the Forex Black Book indicator, you could see we have another green arrow on the current candle. So, another green arrow, green trend bar. If you’re trading the Forex Black Book, this is your next opportunity at the bottom of this current candle to buy it towards the yellow zone or higher. The Forex Black Book indicating a shift back to the upside and momentum.
If you just look at the last couple of times, if you would’ve taken a buy on this candle, yeah, they endure a little bit of a dip, but eventually a buy on this last green arrow took it back up about 30 pips. A buy on this green arrow, right here, took it up about 25 pips. So, here on the third green arrow, again, giving you some opportunity for it to go back up. That’s the direction I would focus on. The only reason I would change that would be a potential breakdown underneath the pink-shaded area for the USDJPY today.
