Transcript of Video
Hello everyone, this is today’s video analysis for December 6, 2018. Today we’re going to take a look at the US Dollar versus the Japanese Yen [USDJPY] for today’s trade analysis.
Starting here on the daily timeframe, the first thing I want to point out here is of course the long-term uptrend this currency pair has been in. We have the black trend line here starting back in May, going all the way into the current timeframe, but actually that uptrend obviously goes much deeper than that all the way back into March of this year into the bottom of the chart and the mid-104s down at the bottom left-hand side of the chart.
So, it’s been quite a long-term uptrend. While in recent days we have seen the market pressuring lower, we are still well within the parameters of this uptrend channel. Obviously we are still above that black trend line. In fact, in the past couple of days, we’ve seen the market make three new lows or a couple of weeks I’d say. Three new higher lows. You could see the low here. The low here. The low here as it continues to ride up that trend line.
Today we are challenging very close to that trend line. The yellow-shaded area. Very interesting area that we want to zoom in on here in a moment, but yellow zone as support. Black trend line as support. Just underneath and shy of the market is the 100-period moving average. It’s actually paralleling right along that black trend line as we speak.
So, let’s go ahead and dive into this yellow zone and see what we could do with it today. Let’s go ahead and zoom in. Yellow zone here. Again, I really want to point out the fact that it has been support. You look back here. I just put a black X right here on the chart. 112.55, 112.75. Support back here on the left. You can see it here again. You could see support here in the middle of that yellow zone, and then of course the current timeframe finding support there as well.
So, it’s clear to me that at least the easiest trading decision we can make is don’t sell. Don’t go short on top of that yellow-shaded area. That’s the easiest trading decision we can possibly make. Don’t sell on top of 112.75, 112.55. So far, for the past several weeks, really since October, that’s been a bad idea to sell on top of that yellow-shaded area. So, if we’re not selling, maybe it potentially becomes a buy scenario into that 112.75, 112.55-level. That way, at least we’re going with what the larger market as a whole has been doing.
It’s fact. It’s statistical fact. There’s nothing we can change about the market. It has been finding support at that yellow zone. So, if the market, the Forex, has been making a decision to exit sells and enter buys at the yellow zone, then us, as smaller individual traders, may also decide that might be a good place to do that as well. Risk-reward-wise, better for buying. Risk-reward tells us that if we’re going to look for an opportunity, we would want to see a pretty decent target.
So, right now if we were to sell it, your target is very small. Your profit target is very small because the yellow zone obviously is support. So, you don’t really think selling risk-reward-wise would be a really good balance in your favor. So, a better balance in your favor would be buying. So, everything right now technically risk-reward-wise is pointing to support, the trend line, and the potential for a buy scenario.
Really we have this larger triangle pattern here on the chart, and I’m going to go ahead and throw that in there real quick just to tell you what I’m looking at here. Let’s throw this in here and this in here, and this like this. So, that larger yellow pattern. Falling highs. Rising lows. That triangle style pattern sitting there tells us, again, we’re at the bottom of that triangle.
If I zoom out a little bit, you could see where that resides there in the grand scheme of the chart. It’s right there at the top of our trend. So, again, we’re at the bottom of that triangle. It tells us that there’s probably more likely a better reason to go long than it would be to go short here for the USDJPY. So, let’s go ahead and zoom it back in here like this. Let me go ahead and take that triangle off, so it’s not so distracting, but I think you get what I’m meaning. Better buys than sells.
Let’s go ahead and take it down to the four-hour timeframe. Of course news can change all of this, but at least right now, again, we could see the market challenging support. Finding support. The past several hours we’ve seen a rally to the orange zone, and then it came right back down. So, let’s look for that. Let’s look for the market to continue to stay above the yellow zone.
The risk. What’s the risk in this scenario? And the risk is it gets underneath that yellow zone. So, if you’re looking to place a stop loss on any trade, then you’re probably looking for it somewhere underneath the yellow zone. So, let’s put it underneath. So, let’s say 112.50, 112.45. Wherever you’re comfortable with your risk parameters, you’re going to put your stop loss under the yellow zone. You could go deeper than that I suppose if you wanted to, if it fits with your risk management practices. But again, the biggest deal is we want to see it stay above the yellow zone, stay above the black trend line, stay within the bottom of that triangle pattern that we just saw. Rising lows as you could see here in the overall scheme of things.
The risk is it breaks underneath it for a move lower on the USDJPY today.
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.