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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 history for this currency pair. We begin all the way back down here, bottom left-hand side of the chart, back in October of 2012. We could see it was down here, right around the 77.80-level, 78.00-level. And over the past couple of years, we’ve seen the climb as it pushed all the way up towards the 105.30-level at the very top of the chart.
So, clearly this currency pair has been in an uptrend for quite some time. I’ve also placed a blue trend line here. Not really going all the way down to the bottom of the trend, but recognizing the fact that we have seen consistent rising lows, even going all the way back here into February of 2013. We saw the bottom of the blue trend line here. We see lows consistently bouncing above that blue trend line. What’s important about that is that it’s also where the current market is challenging, just above that blue trend line, like what we’ve seen here, going all the way back to February of 2013.
So, that’s important to know, where that blue trend line comes from. Let’s go ahead and zoom it in one time here on the Daily Chart. And there’s that same blue trend line coming into play and very close to the current market. Over the past couple of days in the Trade Room, we’ve also been looking at supports down here and yesterday, in the Trade Room, I put this red trend line, recognizing the fact that we see rising lows. Even during this period here, going back to January 24th of this year, we could see we started going into a bit of a range or congestion and right now we’re at the very bottom of that, towards this yellow-shaded area. The red trend line representing rising lows within this range or channel that we’re seeing right now.
And I think channel because you could probably take another trend line. And I’ll just duplicate it here. The same red trend line, and just make it blue. And in doing that, let me see if I can get that blue trend line connected. Well, it selected both of them. Let me see if I could change this up a little bit. And well, both of them keep getting selected. Let’s put this one back here, and now we can do this. And if I take the blue trend line, we can now put it up towards the top.
So, we see somewhat of a channel here developing between the red and the blue trend line. And right now we’re at the very bottom. So, what this tells me is I’m discouraged from selling it right now, because we’re at the bottom of the channel. If I was looking to sell it, I’d prefer to sell up there, closer towards the blue trend line. More likely, given the state that we’ve seen over the past couple of years for the USDJPY, we’re looking for support and potentially the return of the longer-term uptrend.
Now, of course all of that will change if we see a change of the trending pattern and a breakdown of the red trend line, the blue-shaded area, the blue trend line, the longer-term trend line. If we see a breakdown of this area and the last lows that we see along this blue-shaded area, this low back here. If we see a breakdown of that, we’re looking for a change back into a downtrend. So, we’re at a critical decision zone right now for the USDJPY. Staying within or above this area surrounded by the lows that we see with the red trend line, the red trend line, the blue trend line. As long as we stay within or above this area, I’ll say the mid-101s, there’s potential for support and rallies back higher. If it breaks here, we look for the continuation of a downtrend for the USDJPY.
Now, the Forex Black Book has changed to red, which may give us a bearish bias. But even if you’re going to sell it in the direction of the Forex Black Book, you’d prefer to see the market go up first, because that’s the way that indicator is designed to work. It tells you a trend direction and then you’re looking for shifts in momentum on the 4-Hour Chart in that direction. Well, right now the trend’s already, the momentum is already going down, so we can’t see really a shift to go down because it’s already going down. We actually need it to go up, find resistance, and then shift to go down in the direction of the red trend bar.
So, not really probably an opportunity to trade the Forex Black Book today, but if we see, over the next several hours or next day or so, it go back up into the green or the pink-shaded area towards the top of the range of channel that we see there, then that becomes a better opportunity to sell it. So, for the day today, selling right now is not really the main focus, unless it breaks down through this support. For right now, I think we’re more likely looking for support, indicators of reversal for this to go back up and challenge into resistance.
Let’s go ahead and zoom this in one more time here on the Daily Chart. And we could see that everything there. I’m going to go ahead and highlight this yellow-shaded area as our current support. We’re above the red trend line. Above these historical support lows. We see rising lows. As long as we stay above the yellow-shaded area, red trend line, then I’m looking for support and rallies back higher. Rebounds back up here towards the next resistance, which would be the green-shaded area. Let’s go ahead and highlight that with an arrow here into the green-shaded area. This would be your next resistance.
So, here we are right around the 102-level, 101.90s. That’s where we’ve been challenging over the past several hours. As long as we hold here, I’m looking for the bounce and the rally back towards 102.50, 102.60, or 102.70, which is this green-shaded area. Of course if it breaks above there, we’re back to the pink zone or possibly the top of our channel that we’ve just devised here, all the way back up in towards the 104-level in the purple-shaded area. Blue trend line at the very top.
So, as long as we sit down here. Remember this simple trading motto. Buy low, sell high, where you’re at the lowest point of the trend channel. You’re at a low point of the downward momentum. Buy low, sell high. That really tells us that we’re discouraged from selling it right now and more likely to look for a buy. So, where does your sells come into play? Again, likely back up there towards the green, pink, or purple-shaded area for the USDJPY.
Let’s go ahead and take this information down to the 4-Hour Chart. Get a little bit closer view of this currency pair. I’m actually going to take the previous fib off and now let’s take Fibonacci of just this down range. Let’s go from the highest high at the top of the chart, down to the most recent low. And in doing that, we find the .236 fib right at 102.14. That’s where the current market is stalling or hesitating. Just underneath 102.14. That .236 fib. The next Fibonacci retracement level that we see of the last run down is the .382. That happens to sit at 102.52 – the bottom of our green-shaded area.
So, again, we’re looking at support here. We’re looking at potential intraday reversal to go back up and challenge back towards the 102.50s, 102.60s, and 102.70s. The green-shaded area. You could follow it back in time and see very similar price action over here, where it found support in the yellow zone, resistance in the green zone. We now have Fibonacci backing that up as a potential resistance and reversal or retracement point. Then of course, once it gets back up there, if we look for red arrows, look back over here on the left-hand side. We see the red arrows with the Forex Black Book signal indicator. Red arrows, and it fell back down towards the yellow zone.
So that’s really what you’re looking for. With the red trend bar with the Forex Black Book, you’re looking for the rallies to the green zone, red arrows, falls back down in direction of the current momentum. Otherwise, a break back above here continues the upward run. So, for the day today, looking for support. Buying opportunities, targeting back to the green zone. Then, once again, looking for reversal and potentials to fall back down for the USDJPY today.
