Transcript of Video
Hello everyone, this is today’s video analysis for December 18, 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, I’ve zoomed out so we could see a good bit of the trend. Obviously here on this currency pair, much of 2018 has been an uptrend. We started all the way down here back in March at the bottom left into the 104s and now here we are all the way up into the 112s.
We have seen of course over the past few weeks and really the past couple of days, a little bit of a pullback, fall off here for the USDJPY. We’ve seen in the past two days at least the USD having a pretty good pull back down as we start this week. It’s been going down for the past two days, but everything could change tomorrow. We have the fed tomorrow. FOMC coming out. Potential interest rate change and all of that may impact the market in a significant way.
It could see the market continue to go lower. The USD continue to selloff, or it could see a complete reversal and turnaround. We just have to wait and see how that plays out. But again, for the past couple of days though, we have seen some pullback, some selloff. We are also in a very interesting environment as we go into these last two weeks of trading. Liquidity beginning to dry up and whatnot as we get into this holiday season. So, that’s something that you should take into consideration too when you’re discovering your risk management practices over the next couple of weeks.
But we have seen it going down. That, here on the USDJPY, means we’re falling into the long-term trend line, the black trend line, and once again, challenging the 100-period moving average. The blue circles you see here on the chart show when the market came down, touching not only the black trend line, but the 100-period daily simple moving average. That’s the green wavy line you see here on the chart.
Zoom it in a little bit. So, at least the past four times, you could see the market coming down, touching down into that 100-period simple moving average, the green line. Coming close to the daily trend line of course as well, the black trend line, but I think most importantly, settling down on top of that 100-period moving average is very interesting. Why is it so interesting for us today? That’s where we are now. We’re touching that 100-period moving average once again.
So, if the USD finds some footing prior to tomorrow’s FOMC, if the market is bullish USD after FOMC, we may see once again this USDJPY find footing on the daily moving average and rebound back just like it has for much of 2018. So, it’s a very interesting area for us to watch and pay attention to for today and probably going into tomorrow.
So, as we see here, the market falling down into the moving average, into the trend line, giving us reason to expect some support for the day just above the 112.25, 112.10-level, the purple-shaded area that you see here on the chart. Watching for support here for the day today. I don’t think today is the best time to go short and sell. As we sit on top of the trend line, the 100-period moving average, the purple-shaded area, 112.25, I just don’t think today’s the most best lowest risk, highest reward opportunity to go short.
Now, if it breaks down through all of this, we see another day, and let’s say tomorrow opens and closes after FOMC underneath the moving average, then that changes the status quo. That would be a change in the overall trend pattern, is if it were to open and close underneath. A full candle body underneath the moving average. We haven’t seen that in much of 2018, so that would be the change. Getting underneath there, but we haven’t seen that yet. So, it’d be difficult to sell it today. Buying may become an opportunity if we start to see the buyers come back in on the USD. That may become an opportunity, especially I think probably if it gets back above the yellow zone, 112.75, 112.50.
If we were able to get back above there, take a look. Let’s zoom it back in. And without putting more circles on the chart, right here where the black X is, right here where this black X is here, right here just above the blue circle, where this black X is, you could see the market touching down, getting low down into the moving average where the blue circle is. Rebounding, getting back into the yellow zone and making a rebound. So, that would be a good reason to go long, is that if we’d get a rebound back above 112.25, 112.75, the yellow zone, we may start to see it rally back higher again prior to tomorrow’s FOMC.
And if it breaks higher, then we’d already be in it. So, buyers are watching the moving average, the purple zone, or above the yellow zone. Those become potential long opportunities for the USDJPY. Sellers being careful today assuming. You don’t want to assume that this is going to continue to go down. Watching for clues to the breakout. Possibly I suppose staying underneath the yellow zone, 112.55, today, but be very careful with that sitting on top of the moving average.
So, I think more likely in this scenario we’re watching for opportunities for support. Reversal for this to go back up, but keeping eye out for the breakout lower for the USDJPY this week.
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.