Transcript of Video
Hello everyone, this is today’s video analysis for February 8, 2019. 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, we could see that the currency pair has been rising over the past several weeks. We see these couple of black boxes here. Period of congestion here after the flash crash we had a few weeks ago. We had the market come back up. Go into a period of ranging or congestion. Breakout. Then went up, and now we’ve been in a holding pattern between the yellow and the green-shaded areas for a couple of weeks now.
Yellow zone. 109.20, 109.00 is the yellow-shaded area, where we’ve seen support over the past couple of weeks. And then the green zone up here at the top of the black box: 109.70, 109.90. So, interesting area here. 109.70, 109.90, the green zone. We’ve seen quite a bit of resistance into this area. Market has been so far having a very difficult time breaking through that and continuing higher.
Currently the market sitting right around the green zone. Four days, five days if you count the day coming up into it. Five days in a holding pattern. Smaller pattern here into the green zone. Hasn’t really broken lower. Hasn’t really broken higher. Just been kind of holding out inside that green zone.
I do have a Fibonacci measurement here on the chart, and it’s kind of a weird way of looking at Fibonacci. I have it drawn from the highest high way up here at the top of the chart. Taking it from right there, where the black X is, top left-hand side of the chart, down, and it looks like it’s right here in the middle of the wick of the flash crash that we saw several weeks ago. It looks like it’s right there in the middle. What’s important is, and I take it down to the four-hour timeframe, it’s actually connected to some lows that are there in the middle of that.
I didn’t take it all the way to the bottom. I took it somewhere right here. Kind of an average of that, and that’ll be more apparent on the four-hour timeframe. What’s interesting about that is that we’re currently sitting the past four days on top of the .382 Fibonacci retracement level of that range at 109.72. Bottom of the green zone is that fib. So, I just thought that that was interesting to point out.
Let’s take it down to the four-hour timeframe. And as the chart gets refreshed here, again, you take it from that high there and you could see I’ve kind of gone right here in the middle of that area. And if I zoom in one time, maybe twice and scroll it back, you could see that it’s connected into this area right here. Instead of all the way down here, I connected it here. Just kind of an average rather than going all the way to the bottom of the flash. And again, that .382 sits right there at 109.70, the bottom of our green zone.
Take a look at how the market’s been waffling around over the past couple of days. No real upside. No real downside. So, we’re waiting on the market to gain some traction. Is it going to continue the upside? Is it going to break the green zone and go up, or is it going to eventually reverse and go down? That question obviously has not been answered.
I think it’s very interesting. I’m going to pop back over to the daily real quick and zoom all the way in, and we looked at this yesterday. It’s kind of hard to see it like this. If I pull it over here like this, what we’re seeing is two days ago we saw a candle body get above that green zone, so it’s easier to see it on the left-hand side. That is the USDJPY again, but look how a couple of days ago we got above here.
So, again, there’s really I think more of an expectation that this got above here. It’s just kind of settled back. All we need is some positive motivation for this to go higher. Negative motivation would likely break back down under the green zone.
Take a look at the USD index while we have it here on the right-hand side. The chart on the right is the USD index. The black circle, blue circle show resistance at the orange zone. 96.30, 96.40. And here we are again finding resistance. So, again, kind of one of two things is going to happen on the USD index, right? It’s either going to finally change the status quo and break 96.40 and go higher, which it hasn’t done yet, or it’s going to continue what it’s been doing and find resistance and turn around and go back down.
Likely whatever happens over here is going to help dictate what happens over here on the left-hand side on the USDJPY. So, we’re watching this intently. If we see a strong selloff on the USD back to the pink zone, 96.05, we may see a push underneath 109.70 and a pull back down to the yellow zone. But if the USD gains some momentum, pushes through the 96.40-level and changes and gets above where these black circles found resistance, a continuation of the upside momentum for the USD could see the break of the green zone on the USDJPY.
So, watching it somewhat intently. I’m looking for – if I want to buy this, if I’m going to go long, again, we know already what the USD needs to do. The USD needs to get above the orange-shaded area if we’re going to go long USDJPY. So, that’s the next thing I’m looking for. Maybe some infusion of buyers leaving a strong bullish candle back above the green-shaded area. I’m just drawing it out to look more bullish there.
So, we look for a strong influx of buy orders and the USD to get back above the orange zone. Otherwise, if the market is able to get back under the green zone and we see the selloff of the USD again, we may be looking for the downside for 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.