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I’m going to begin the day today on the US Dollar versus the Japanese Yen [USDJPY]. Starting here on the Daily Chart, I’ve zoomed way out so we could see further back in history first. We go back to the bottom left-hand side of the chart. We’re looking all the way back into 2012, down here towards the 77.0-level is where the uptrend began. We’ve been moving up over the past couple of years, as it pushed all the way up here, a few months ago, all the way into the mid-105s, capping out at the high right around 105.50-level.
Throughout the life of this uptrend, we’ve continued to see higher highs and higher lows. Particularly the higher lows is what I want to focus in on today. The blue trend line here, going all the way back into February of 2013, we’ve continued to see a rise in the lows. Even though we’ve seen some falling highs for a period of time, we’ve continued to see a rise in the lows along this blue trend line. And that’s the most important part about today’s analysis. If we zoom in a little bit here on the Daily Chart, we could see that over the past several weeks, even though we’ve been ranging or range-bound here for this currency pair between the top and bottom of this red box that you see, we’ve continued to see rising lows inside this red box. So, you could see rising lows. If I was to take a trend line here and place it on the last several lows here, you could see the rising lows within that red box. And still maintaining higher lows above the blue trend line.
So, that’s the most important part about the trend here for the USDJPY right now. And as long as it stays above, we’ll call it, at this point, this yellow-shaded area and the 101.60-level, the bottom of that yellow-shaded area, I expect that we’re looking for buys on dips into support and new rallies higher in the direction of the longer-term trend. And the only thing that’s going to change my attitude or focus about this currency pair is if it breaks down underneath the blue and the black trend line, the red box, the last support lows that we see here. If it gets down underneath here, then we begin looking for the change of the trending pattern and the continuation lower.
So, all in all, what this means is we’re looking for buys on dips into support. Zoom it in one more time here on the Daily Chart. And if you take a look over the past several days, we’re looking at today included, 12 days. The past 12 days have been stuck between the green-shaded area into the mid-102s and the yellow-shaded area – the mid-101s. There’s about a 75 to 100-pip zone between the yellow zone and green zone that we have been stuck in for the past few days. But keeping that and maintaing that focus of buys on dips into support has given us the opportunity a few times to buy it into the yellow-shaded area as it dipped down here and target back to the green zone.
Now, if you’ve been focused in the other direction, selling into the green zone, that’s fine too. You’ve had several opportunities to sell into the green-shaded area and target back down to the yellow zone, but I think we still want to maintain focus in the direction of the overall longer-term trend. As long as it stays above the blue and the black trend line, the bottom of this box, and we maintain the pattern of the trend, which is higher lows, I want to continue to focus my efforts on the buy side. So, I have been buying on dips to the yellow zone, targeting the green zone. And I’m looking for, at some point in time, we look for a breakout above the green zone and a continuation of the uptrend.
Until it does that, we’ll of course look for a continuation of this area of this congestion zone. If you decide to sell it into the green zone, target the yellow zone, protecting profit as it goes down. If you decide to buy it into the yellow zone, protect profit as it works its way back to the green zone. At some point, we will see a breakout of this congestion and the continuation of the trending pattern.
Now, over the past several days, we have seen the Forex Black Book trend bar is red. So, that does lead you to believe that you could be looking for sells on rallies into the resistance and into the green-shaded area, but just be cautious and use appropriate risk strategies because I believe, if it breaks above the green zone, we look for a continuation of the longer-term trend, potentially pushing back into the 104-level at the top of the box and our last resistance high we see here. And of course a break above there, we even challenge back to the 105s or even higher as we look for a continuation of the longer-term trend.
Take that information down to the 4-Hour Chart. And as we get down here, we can see the market has been bouncing around between the green and the yellow zone for the past several days. There have been a couple opportunities, where we have seen red arrows into the green zone. Our most recent red arrow here, if you took a sell on that red arrow, which would’ve been the open of that blue candle, you did see about 30 to 35 pips of profit as it took a dip back down here towards the yellow-shaded area.
So, red arrow, red trend bar with the Forex Black Book has seen a little bit of profit. I would suspect, at this point, you want to be sure to protect that profit because it has not broken underneath the yellow-shaded area. So, for today, again, very similar to yesterday. The yellow zone will be our support zone. Green zone will be our resistance zone. Selling and buying within this congestion zone is a possibility. Buys on dips is the focus though, in the direction of the trend. A breakout above the green zone goes higher or below the yellow zone goes lower for the USDJPY today.
