Transcript of Video
Hello everyone, this is today’s video analysis for October 3, 2018. Today we’re looking at the US Dollar versus the Japanese Yen [USDJPY] for today’s trade analysis.
First things first. Of course this trend is up. I don’t think there’s any real argument with that. We could see the market moving higher for the past several weeks. I’ve put these black boxes on the chart within these periods of ranging between support and resistance within the overall uptrend above this blue trend line.
So, pretty easy to see the direction the market has been going in and probably the direction that we want to continue to focus on until something changes. So, if we zoom it in on current market, you could see these last three days up here. Top right-hand corner. We pushed through the green zone and for the past two days, we have sat on top of that green zone, 113.60, 113.75 as support. So, clearly within the direction of the trend, within the pattern of this trend, we would be looking to buy above the green zone and targeting the blue zone, which happens to be closer to 114.15 as the bottom of that blue zone.
Of course there’s a top closer to 114.40. Buying above the green zone, targeting above the blue zone trades the direction of the trend and the pattern within the trend. The risk is that it breaks under the green zone and starts to go lower. That would be the risk in this scenario. The trend pattern changes and it starts to reverse and go lower. So, we know what the risk is on the trade.
Our stop loss goes under the green zone. Probably underneath the last couple of day lows with minimal risk. We buy it above the green zone. We target the blue-shaded area.
Let’s go head down to the four-hour timeframe. Squeeze this back out and you could see that’s really what’s been happening for the past several hours. It came close to the blue zone. The market dipped back down here to the green zone. 113.60 being the support baseline, the bottom of the green zone. Sat there for a few hours and now we see the market pushing higher.
So, if we’re going to look for an opportunity to go long, we want to do it as close as possible to this green zone because that provides the lowest degree of risk. Again, our risk is just underneath these last lows. So, if you’re looking for lower risk, buying on top of the green zone, 113.75, you’re looking about 25 to 30 pips of risk. If you were to buy it right now, it’s not terrible, but again, buying right now increases your risk to about 40 to 45 pips.
So, you’re increasing your risk by 10 pips. 10 to 15 pips by buying now, but waiting for it to dip back down is often an easy way to decrease the potential loss or risk. And then of course you look for the market to rally back to the blue zone after checking back. So, if you’re looking to trade the USDJPY today within the pattern of the trend, the checkback to the green zone, retest to 113.75 becomes an opportunity to buy. Targeting the blue-shaded area or higher within the direction of the trend pattern. The risk and a change of perspective comes on a push through the bottom of the green-shaded area, 113.60 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.