Transcript of Video
Hello everyone, this is today’s video analysis for August 8, 2018. Today we’re looking at the US Dollar versus the Japanese Yen [USDJPY] for today’s trade analysis.
We have really two different trends. A shorter-term trend. A medium-term trend that we’re going to look at today here for this currency pair. Looking on the daily timeframe, first one will be the black trend line. You could see it coming up from about the middle part of the longer-term trend.
We start all the way down here at the very bottom of the chart, back in March for the longer-term trend. Mid-part of the trend starts right about in the middle, where it came down, touched the 100-period simple moving average, and then began its next leg, making a new high for the USDJPY. So, we have that mid-term trend here for the USDJPY.
Then we have a much shorter-term trend. That’s the blue trend line. I’m going to zoom in a little bit here and you could see that little blue trend line over here. So, for the past seven days, we have capped out at the high right around the 112-level, the blue-shaded area and been pulling back or pushing back down towards the 110.95, 110.70-level, the orange-shaded area.
So, it’s had a little bit of a pullback here within the longer-term uptrend. We’ve seen that many times before, where it came back down into support, found support, and turned back higher. That’s what creates an uptrend. Higher supports or higher lows. So, we know that as long as it is staying within that pattern – higher lows -, we have the potential to return to the longer-term uptrend.
A couple things about the orange zone, 110.70, 110.95. You look back in time. You see the three blue circles that shows clearly that this same area has been resistance before. So, we’re looking at consistent trading behavior. The market is making consistent trading decisions around this specific level, orange-shaded area. Historically, blue circles as resistance. The little black box here on the right-hand side shows for multiple days finding support.
So, again, what we’re showing is that the market is making trading decisions to buy, sell, enter and exit right around this orange zone in a consistent fashion. So, if the market is doing that, the larger Forex as a whole, then it’s possible that we want to do that since we have no control over whether it goes up or down, but we can see where the market is making those decisions. So, it gives us an opportunity to make our decisions at the same intervals or zones if you will that you see here on my chart.
So, as it approaches 110.95, 110.70, we look for support because that’s what it did the last time and we look for it to go back up. And if it breaks through there, of course the attitude or expectation changes and then you look for it to go back down. So, let’s look at this orange zone a little bit deeper. So, we know that one of two things is going to happen. It’s either going to find support here as it has before and go back up at least, at minimum, to the green zone, if not higher.
The risk here is that it breaks under the orange zone and begins pushing back down to the pink-shaded area. Why? Because look at this blue circle back here. That’s what happened back here. Underneath the orange zone, it went to the pink zone. So, we have this expectation around the orange zone. Support there, goes back up. Breaks the green zone, goes higher. Breaking through the orange zone, goes down to the pink zone. So, that’s what we’re looking for today.
So, it gives us an opportunity to make a trading decision. So, what we’ll do is go down here to the four-hour timeframe and begin looking for clues, evidence, price action that implies one of those two things.
So, often, as the market dips down into a support zone like the orange-shaded area, what I’m looking for is some indication that there is buying pressure. Are there even buy orders or buyers interested in going long and taking a buy at 110.95, 110.70? So, what we’re often looking for is some infusion of buy orders, and I’ll draw it out to imply a blue bullish candle here. Let’s just draw it out like this. And so, it implies a sudden infusion of buy orders.
In other words, buyers are here. Buyers are interested, and we’re going to look for it to go back up to the green-shaded area. And within the blue trend, the little short-term blue trend, that wouldn’t be out of the question. We’re at the bottom of the trend. We’ve seen multiple instances within here, where it went up within this little short trend. It went up within the little short trend. It went up within the little short trend.
So, the possibility of it finding support and going up within the short trend is clearly there from the orange-shaded area. The next thing we would look for though to change this would be the breakout underneath the orange zone. If it was able to get underneath, and I’ll draw it out as a supposed red candle underneath 110.70, that’s the risk in this scenario and then we look for it to go lower again.
So, one of these types of setups is what we’re looking for. An infusion of buy orders, buy towards the green zone. Breakout under the orange zone, sell towards the pink zone. If you buy it, your stop loss is underneath, just like I’ve put this red line here. Stop loss would be underneath. If you buy it, you don’t want it to break underneath, so your risk is limited.
I don’t think right now is a good opportunity to go short because it’s sitting on top of support, so that’s not really an option at the current moment. Maybe back at the green zone, but definitely something to watch for if it makes it back up there. But right now, within the longer-term or mid-term trend, we’re looking for a potential buy into 110.95. Risk or stop loss is underneath. Target’s the green zone or higher. No real reason right now to go short on the USDJPY.
From Forex Traders Daily, this has been your daily analysis with Ross. If you would like to get Ross’ analysis on all the currency pairs he’s watching and all the trades he takes today, join him in his live Trade Room by clicking on the link below. Please leave any comments you have about today’s video in the comment section below.