Want FULL ACCESS To
ROSS’ DAILY TRADE ROOM?
Simply Click The Get Started Button Right Now!
Transcript of Video
Click Here to receive an email alert when Ross posts a new daily video
I’m going to begin the day today on the US Dollar versus the Japanese Yen [USDJPY]. I’m going to start all the way out here on the Weekly Chart today so we can get a long-term viewpoint of this currency pair. Of course in the most recent timeframe we’ve seen the market challenging into a key resistance level that starts up here right around the 103.0-level, going into the low 103s, towards 103.30. That’s highlighted in pink and it may be a little bit hard to see on the zoomed out view, but if you look to the right-hand side of the chart, you can see our last two resistance highs here into this 103-level and you can see the last time we challenged here was back into May of 2013, where the vertical dashed line on the right-hand side of the chart is.
That was our previous time that we challenged this 103-level, and of course, in the current time, we are also challenging this 103-level. Follow it back to the left-hand side of the chart. That pink-shaded area. The same 103-level. You follow it back to the left-hand side of the chart and the last time we really challenged this level was all the way back into 2008. You see October of 2008 we finally broke under that pink-shaded area and began the long-term downtrend. Prior to that, we sat on top of that same 103-level as support back here into May of 2008. So, a long time going since the last time we were into this price zone. So, it is a key resistance level. If we can finally satisfy a break of 103, I don’t think it’s too hard for us to see it back into the 105s.
Previous Weekly Chart fib – if I scoot it back just a little bit further back to the left-hand side, you can see Fibonacci from the highest high to the lowest low of the last downtrend. Highest high on the left-hand side of the chart goes all the way up here into the 124.0-level and all the way down into the 75.50-level. You could see that previous downtrend. Fibonacci of that previous downtrend puts the .618 Fibonacci retracement level at 105.55, and that is sitting just above our current key resistance high. So, let’s take that information from the Weekly Chart, and now we could see where that pink-shaded area comes from. Take it down to the Daily Chart and of course here we are back in May, challenging that pink-shaded area, resistance high, and falling back down.
And of course, in the most recent timeframe, we’ve seen an uptrend channel pushing back between these red lines, pushing back up into the 103-level. So, key resistance level. A break above it continues the uptrend. Holding underneath it, potential for a reversal, and that’s what we’ll be watching for at least today, if not going through the rest of the week. As long as it holds within or underneath that pink-shaded area, I’m looking for clues to reversal. Candlestick formations. Charting patterns that imply reversal that could tell us we’re going to at least take another charge back down to this blue trend line, representing the lows for quite some time.
We go all the way back here basically since the beginning of the year, where we see rising lows along this blue trend line. It wouldn’t be too hard to see this push back down towards the 99-level or even into the upper-98s, down here towards this blue trend line. 99.0 sits down here just right underneath the current market and into that blue trend line. So, it wouldn’t be too hard to see us pushing back down into that blue trend line because that’s been the pattern that we’ve seen basically for the year of 2013.
But the main focus of course today is this pink-shaded area at the very top of the chart. Let’s go ahead and take it down to the 4-Hour Chart. And as we get down here to the 4-Hour Chart, we could see the price action around this pink zone over the past several days. We see the challenge here. A dip back to the blue zone. The challenge here not quite all the way down to the blue zone, staying within the parameters of the uptrend creating a new higher low. Remember that’s the definition of an uptrend – is higher highs and higher lows. So, we still remain within the defining points of an uptrend.
If I go ahead and just – you know, obviously we have the red trend line here, but if I just take a couple of black X’s here and say there is a low and here is a low, and of course the current low that we’re seeing right now. We could see the defining points of the trend. Higher lows means that we’re in an uptrend. Higher highs means that we’re in an uptrend. Could that change? Absolutely. That’s how we know that a trend has changed – when we start to see lower highs and lower lows. So that’s definitely something that we’ll watch for as we go through this week. The main focus of course is this pink-shaded area. Staying underneath it, a break underneath this red trend line and of course a break underneath the lows, look for the continuation lower.
So, let’s go ahead and put an arrow here. Staying within or under that pink-shaded area today, potential reversal for this to go back down. A break under the red trend line of course will give us some further clues to that, but I expect the 102.90 to 103.0-level – that’s the pink-shaded area. As long as we stay within or underneath there, there is a fairly low-risk opportunity to sell this, targeting back down to the blue zone. The blue zone, of course, is our next support, and we could see that historically back here on the left-hand side. So, if it stays under the pink zone and you sell it, target back here to the blue zone. Of course in the direction of the trend, we might look for a challenge of the blue zone, a challenge of 102 to become our next buying opportunity.
The other side of this is if today, or really for anytime this week, if we see a daily – and I’m going to go back to the Daily Chart and zoom in one time, and go back here to the Daily Chart and the pink-shaded area. If we see a daily candle open and close above this pink-shaded area, I’ll begin expecting a continuation of the uptrend. As you could see, over the past week, we have not seen a full candle body open and close above that pink-shaded area, above the 103.30-level. It’s continued to remain within or underneath that pink-shaded area. So, this will be the key decision for me this week.
If it opens and closes with a full candle body above the pink zone, it increases my confidence it’s going higher. If it opens and closes back underneath the red trend line and stays underneath the pink-shaded area, it increases my confidence that it’s going to go back down. So, we really need to wait another day or so before we can have confidence in a direction based on this 4-hour chart. If we go back down to the 4-Hour Chart, I think we could provide us some intraday trading opportunities. And as we can see, two times here finding resistance under the pink zone. So, if it stays under the pink zone and starts to fall back down underneath the pink zone, we could have short-term selling opportunity with fairly low risk because we just don’t want it to break back above the 103.30-level.
So, staying within or under it, potential selling opportunities targeting back to the blue zone. Getting back above 103.30, we begin looking for that open and close above 103.30 on the Daily Chart, and the potential continuation. Again, we have already pointed out a potential target all the way into the 105s. There’s likely some resistance before we get there, but I think that becomes a major target and that of course would be back towards the top of our longer-term trend channel and the red trend line that we see here on the 4-Hour Chart for the USDJPY this week.
