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I’m going to get started today on the US Dollar versus the Japanese Yen [USDJPY]. I’m going to start all the way out here on the Monthly Chart because I think it’s important for us to get a long-term view, and then we’ll go down to our smaller compressions for this currency pair today. We’re starting all the way back here. I’m going to start with the blue trend line, all the way back into 2002. You could see it capping out up here, top of the blue trend line, 2002, connecting here in the middle of the chart right around June of 2007.
So, about a five-year period it went down. Then went right back up and connected with this trend line. Then we saw a significant downtrend as it fell from here into the 123s, all the way down into the 75s. So, quite a long fall there. Then, here into the bottom of the chart, down into the end of 2011, it began starting to push higher. 2012. A significant run higher, and it’s now pushed all the way back towards this blue trend line again. So, I think it’s important for you to see where that blue trend line comes from, before we start going down to the smaller compressions here for the USDJPY.
So, let’s go ahead and take it to down to the Weekly Chart, and there it is just peaking in at the very top right-hand side of your chart. You see the blue trend line coming down. That’s the trend line of course that we need to pay attention to from the Monthly Chart. Another aspect of this chart of course is that we’re in an uptrend. There’s no question in anybody’s mind that we’ve been in an uptrend for quite some time here for the USDJPY. It started all the way back in 2011 again and 2012. The red trend lines represent the uptrend. I’ve connected the longer red trend line to the last lows here.
The shorter red trend line to the last lows. Shouldn’t be any doubt in anybody’s mind. Long-term we have been in an uptrend, but don’t forget about that bearish blue trend line coming down from the very top of the chart, from the Monthly Chart. Let’s go ahead and, here on the Weekly Chart, zoom it in a little bit so we could see a little bit more detail. We’re starting to get a little bit more detail as we come in like this. Right now the market is sitting up here into right around the 107-level. A little bit hard to see still on the Weekly Chart, but we get some more detail on the Daily Chart, but the current market sits right about right here into 107 and that’s where we’re currently finding support.
You find 107 here on this chart, which is right about where my crosshair is. There’s a little, highlighted orange-shaded area there. Kind of hard to see, but if you follow it back in time to the left-hand side of the chart, there’s nothing back here. Going back for a couple years now, nothing really showing us support or resistance here on the Weekly Chart even here for the USDJPY. The next support that we could recognize here on this vantage point of the Weekly Chart would be back down here in this blue-shaded area, back down into the 105-level, so you could see that resistance here.
So, let’s go ahead now. Take that information down a little bit deeper to the Daily Chart. Now we’re starting to see a little bit more detail. There’s that orange-shaded area that I mentioned on the Weekly, now here on the Daily, right around 107. That’s our current support. But here on the Daily, we can see a little bit of congestion right here. Four days found congestion here, just above 107, and then began the next phase or next leg of the uptrend. The interesting thing about that of course is that that is where we are right now. Right into that little period of congestion, which is now our current support.
The next period of congestion, the next area that we see support would potentially be all the way down here towards this blue-shaded area. The next blue box down, and that would be back, again, down towards 105. So, a long way down. If it does satisfy a breakdown through this orange-shaded area, we could see it all the way back down here towards 105.
For the intraday today, I would expect that this orange-shaded area be our area of interest. Within it or above it, we turn around and go back up. If it breaks underneath it, we go back down. Fibonacci could be a little bit tricky here on this currency pair. I have a couple of fibs here, but I think the most important one that you need to pay attention to will be from the highest high that you see up here at the top of the chart, back down to this low here into the blue-shaded area. That puts the .382 right at 106.64. A little bit below that orange-shaded area. Now, I could take that same fib and squeeze it in a little bit. We could probably go to this low right here and we get a little bit closer. We could probably go to this low right here. We get a little bit closer with Fibonacci.
Fibonacci is a bit subjective to the range that you’re drawing to. You could even go right here and find that we’re at the .886 fib. So, I think that along with the congestion zone highlighted in orange, that will be our support today for the USDJPY. Let’s go ahead and take that information down to the 4-Hour Chart. Here we are so far today, finding support there into that orange-shaded area. Let’s drag this green-shaded area over a little bit. So, for the day today, as long as it holds within or above that orange zone, we’re now looking at our support zone.
Zoom it out a little bit here on the 4-Hour. There’s that period of congestion back here on the left. So, we know that congestion over here on the left will likely hold as support. We could see that in the orange-shaded area. Above it, we turn around and go back up, maybe to the green-shaded area as our next resistance or potentially even the blue-shaded area as a next resistance. So, here becomes our barrier of support for the day today. Breaking down through here, we look for the beginnings of another push back lower again, which I mention could be as deep as – let me see if I can get it selected here. This blue-shaded area that sits down here. That blue-shaded area represents this historical area of congestion back here that’s down there closer to some Fibonacci also, down close to the mid to low-105.00s.
Let’s go ahead and put an arrow down there. Let’s put an arrow all the way down there. That becomes our next support if we break through the current area of congestion, and you could probably even make argument for widening this orange-shaded area out a little bit. Let me see if I can get it selected here. I suppose there could be an argument for widening out a little bit, even more like that, more so towards the 106.65-level. Either way you look at it, it needs to break through this little area of congestion back here. I could, again, widen this out a little bit like this. It needs to break through that period of congestion before we see it pushing all the way down to the blue zone.
As long as we’re in here, maybe above 106.60, 107.00, we look for support. Potential reversal clues to go back up in the direction of the trend. If it breaks down through here, the .382 fib at 106.64, we’re likely pushing all the way back down to the blue zone. So, for the day today, I’d be very discouraged about selling it right now. I want it to go back up, maybe to the green or the blue zone, before I would sell this currency pair again, or break through support. Otherwise we’re looking for those clues of support and reversal to go back up.
Zoom it in here on the 4-Hour Chart. You could see that orange-shaded area. We also see the Forex Black Book trend bar has turned red. That’s a new development here this week for the USDJPY, is turn red. So, that’s beginning to show this sell or bearish bias that we’ve seen over the past several days. Again, if you’re going to sell based on the red trend bar with the Forex Black Book down here, I say this every day in the Trade Room. The best opportunity to sell with the Forex Black Book is on a rally higher, test resistance, red arrow, and then you sell it. Selling into support, like we are right now into this orange-shaded area, becomes much more difficult to recommend a sell, because we’re at a lower point. Remember buy low, sell high.
So, we’re at a low point. If I’m going to sell it, I want it to either go back up to resistance or break through the support. If I’m going to buy it, these support levels are the areas we look for that support and potential reversal to go back up in the direction of the longer-term trend for the USDJPY this week.
