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 get started today on the US Dollar versus the Japanese Yen [USDJPY]. I’m starting all the way out here on the Monthly Chart because there’s some important historical aspects that I think we need to point out first, before we go down to the smaller compressions.
First off, of course we’ve studied this over the past several weeks; is the long-term downtrend. The blue trend line coming down, connecting with the high all the way back here into 2002. Then connecting with this high into 2007. So, a few years between those two highs and now we could see the market now coming back up into that blue trend line. We’ve looked at that in the Trade Room over the past several weeks here. That blue trend line, sitting right there at the top of the chart.
Next thing I want to point out here, and I’m going to zoom in a little bit, so we could see this a little bit better, are these two horizontal, red lines that we see here on the chart. Right at the top of the chart, two red lines coming back in time. You see it’s highlighted in purple. May be a little difficult to see in there because it’s so small. It’ll be more clear on the smaller compressions, but you follow those red lines back in time and our last high that we see back here on the left-hand side of the chart is that last major hurdle, and you could see it’s highlighted with that red X on the left-hand side of the chart.
So, where that red X is we see our last resistance high before the downtrend continued. Look how major that resistance high was. It was pretty strong. Remember this is the Monthly Chart, so five months going straight up, and then it found resistance here into these red lines and then went straight back down. So, pretty major resistance high. Key resistance level for the USDJPY. If it stays underneath it, high probability of reversal to go back down. If it breaks above it, then we look for continuation higher for the USDJPY. We’ll look for further targets later on in the Trade Room.
So let’s go ahead and take a look at this. These two red lines in current time on the smaller compression. Let’s go down to the Weekly Chart, and again, we’re not going to see much here different on the Weekly, except for there’s the blue trend line coming down from the top that we just looked at on the Monthly Chart. Blue trend line. There’s our two red lines coming across the top. So, that’s important for us to realize here on the Weekly Chart, and of course the long-term uptrend that we’ve been in here for the USDJPY.
Take it down to the Daily. This is going to get us a little bit more detail and we’re going to start to see how those levels are affecting the current market. And there is that purple-shaded area. There are the two horizontal, red lines that we looked at. From that historical resistance that we looked at over there on the left-hand side to now current resistance here. 110.0 to 110.50. That’s that shaded area. So, it’s my expectation that as long as it stays within or under this, let me put an arrow here. Within or under this, and I’m going to change it to the black color so it’s easier to see. Then I think we’re looking for resistance and potential reversal here for the USDJPY, at least on an intraday basis, if not longer because of what we see back there in history.
If you’ve been in buys, remember over the past several months in the Trade Room I’ve been discussing buying the USDJPY. Only buying was the directional purpose here for this pair. And even over the past few weeks, as we are in this box and in this period of congestion, I’ve been suggesting buying was the direction to focus in on here for the USDJPY. So, if you’ve been doing that, you’ve reached your target. It’s reached the ultimate target. It’s reached 110. We’ve been talking about 110 for several months here, and here it is finally reaching into that resistance target.
It’s time to take profit. It’s time to close profit because there’s a high probability of resistance. If anything, you must protect profit if you have it right now for the USDJPY because I think there’s a great expectation of resistance here and maybe even some short-term reversal because it’s been such a long-term uptrend. Remember buy low, sell high. So, if you’re at the highest peak of the trend, becomes very difficult to suggest buying it because there’s a high probability of reversal.
We also have pushed through on an intraday basis above that blue trend line. Remember that blue trend line though comes from the Monthly Chart. So, I’m not too concerned about that at this point because it hasn’t broken it on the Monthly Chart, but just keep that in mind that we are above that. So, if we can hold underneath here, I think we’re looking for a little bit of a bounce back down. A breakout above here could be a very dramatic turn higher that would break resistance, break above this zone of resistance. Likely if anybody is starting to build selling positions here, their stop loss placements are going to go just above that purple zone. And if it breaks out, we’re going to see acceleration higher, and we’ll look for higher targets later on in the Trade Room today.
So, very interesting levels that we’re seeing here. Of course Forex Black Book is green. It’s been green the whole time it’s been going up, so that’s nothing new here for the USDJPY. Let’s take it down to the 4-Hour Chart, and let me squeeze it out here like this. There’s the 4-Hour Chart. During the Trade Room yesterday we noticed the open and close, the single candle bodies on the 4-Hour Chart above the 109.50-level. And it was my suggestion that if you were doing anything there on the UDJPY with those opens and closes above 109.50, that it was most likely that you were looking for buys above that yellow-shaded area.
So, if you bought it above 109.50, then you’re now realizing profit as it touches into the 110-level and into this purple-shaded area at the very top of the chart. Again, even if you did those short buys that we talked about yesterday from the Trade Room, you should be protecting profit because there’s a high probability of resistance here. Does it have to reverse? Absolutely not. It doesn’t have to do anything, but we definitely expect that there will be at least some intraday bounce back from this purple-shaded area.
Anything above it, and I mean a serious single candle body, probably the Daily, maybe even the Weekly, above 110.50, above the purple zone, I think we’re looking for it to continue higher. So, if you bought it yesterday, you’re protecting profit as it challenges into the 110-level. If you didn’t buy it, don’t buy it right now. This is a terrible place to buy it as it’s bumping its head into this concrete ceiling that we’ve seen from historical resistance here.
If you’re going to buy it, you want it to go down first. You want it to challenge back to the top of that blue box, back to the yellow zone, back to the mid-109s if you’re going to buy it. Don’t buy it right now. Otherwise you’re watching for clues to resistance and potential reversal here for the USDJPY over the next coming days.
