New Year 2014 Forex Analysis (USDJPY)

Hi Forex Traders,

Happy New Year! I wish everyone a very healthy, happy, prosperous and profitable 2014! 

For some this message might seem earlier, but in fact the first countries are already celebrating New Years Eve at 10am GMT or 5am EST. Also, some 30 stock markets are closed today on the 31st of December and probably the rest of world closes on the 1st of January.

The Forex market, as far as I remember, should close at about 4pm EST time, which is 9pm GMT and then reopen again some 24 hours later at around 4-5 pm EST on January the 1st.

With just a few hours to go, Forex traders are close to witnessing the final closing prices of the trading year 2013. As promised yesterday, today’s article will discuss the bigger longer-term trend.

USDJPY TREND

The Yen has been trending up since October 2012. The uptrend has been strong and powerful – although from the monthly perspective price is actually correcting impulsively a former downtrend.

Here is a recap:

1)      When placing a Fibonacci retracement on the impulsive up (green Fib), it is clear that price stopped at the 38.2% Fibonacci retracement.

2)      There after a few months of consolidation occurred within a contracting triangle (magenta).

3)      Price seems now to have broken the former top (orange) right in time. A longer consolidation zone would have shown weakness in the chart pattern.

4)      The break of the top will be confirmed later today when the Forex market closes. If there is a candle close above that resistance level, then the top can be considered broken and the uptrend / up impulse is back in play and full force in my opinion from this weekly/monthly perspective.

31- 12- 2013 uj

USDJPY KEY LEVELS

Let’s continue with the key numbers for the years.

A)     2013 open:                 87.20
2013 high:                           105.40
2013 low:                            86.70
2013 close:                         open – now +/-105
body of candle:               +1,780 pips
wick bottom:                    50 pips
wick top:                            open – now 40 pips

B)      2012 open:                76.93
2012 high:                           86.76
2012 low:                            76.00
2012 close:                         86.76
body of candle:               +983 pips
wick bottom:                    93 pips
wick top:                            0 pips

C)      2011 open:                 81.23
2011 high:                           85.52
2011 low:                            75.55
2011 close:                         76.94
body of candle:               -427 pips
wick bottom:                    139 pips
wick top:                            429 pips

MEGA TARGETS

The upside targets:

a)      The first target of any 38.2% Fib is always the -27.2% Fibonacci target, which is around 111. This also ties into a resistance zone on the left (red lines) which were former bottoms and top (between 109 and 111.50).

b)      At this level price could stall and make a bull flag correction, or retrace downwards more impulsively and deeper. If the first scenario were to play out or if price were to only stall marginally at these levels, then, there could be a trend continuation up towards the -61.8% Fibonacci retracement at 120. There is no guarantee though that price can go that high.

c)       If the trend is strong then price could even extend a bit above the -61.8% target. In that case a bigger resistance is just below 125.

TIME FRAME

What can Forex traders expect in the upcoming 12 months of the year 2014? An uptrend continuation seems likely. There are several factors:

The impulse which started in the 2nd part of 2012 and 2013 is very strong. The close of this year’s candle will most likely be very near its high, which means that the yearly close is very bullish. Usually such candles such either an immediate continuation or at max a small retracement. Therefore January 2014 should translate into a bullish month and so should the entire Q1 2014. How much the trend continues in Q2 2014 is tough to say and depends on tapering as well.

Did you find this analysis interesting and helpful? Any pair you have preference for? Let us know down below!

We will be back with a monthly / long-term analysis such as this on more currency pairs (like EURUSD, GBPUSD, AUDUSD, EURJPY, EURAUD) starting from Thursday January 2 onwards.

At the end we will summarize the entire market and give the 2014 Forex market expected outline!

Wish you all Good Trading and a Grand 2014!!!

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Chris is the head of the mentoring program and trading room at Winner's Edge Trading. He has a passion for technical analysis and helping Forex traders achieve their goals in trading. Chris has been trading for almost 10 years and is most fond of the Double Trend Trap (as a strategy), moving averages (as an indicator) and Fibonacci (as a tool).

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