close icon

USDJPY: How to Buy and Hold a Forex Pair

USDJPY has been in recovery mode since the “flash crash” on January 3rd. The pair plunged to as low as 104.82 that day, but the bears couldn’t maintain their momentum. The market reached 112.14 on March 5th for a rally of over 730 pips.

Of course, picking up all of it would have been pure luck. Besides, after such a violent selloff, there are hardly any bulls around. However, once the bottom was in place, there was a way to take advantage of roughly half of the surge to 112.14 so far.

The following Elliott Wave chart was sent to our subscribers on January 14th, when USDJPY was still hovering around 108.50. It shows that a little patience and the ability to identify a key level can compensate for the low level of precision the market allowed.

Elliott Wave analysis of USDJPY currency pair

The findings on the 4-hour chart of USDJPY wouldn’t be possible without the weekly and daily charts of the pair, which are also included in our premium analyses.

USDJPY in Elliott Wave Context

This chart revealed a simple a-b-c zigzag in the position of wave (a), where wave “b” was a triangle. Which meant the plunge to 104.82 was a double zigzag in wave (b). So, it followed that instead being overly bearish, it was time to take a contrarian approach and put more trust in the bulls. As long as USDJPY was trading above 104.82, the bulls were going to remain in control in wave (c) up.

That was all the information we could extract from USDJPY’s 4-hour chart. Fortunately, it was enough. By January 21st, the pair was already approaching 109.80.

USDJPY Elliott Wave price chart

By the time we had to send the next portion of Elliott Wave analyses to clients, USDJPY was trading above the previous swing high. This allowed us to move the invalidation level from 104.82 up to 107.77, thus reducing the risk while still keeping a long position.

The new strategy dictated that as long as the pair traded above 107.77, the positive outlook was still valid. We hoped that the recovery from 104.82 was going to evolve into a textbook five-wave impulse.

Dollar to Yen Elliott Wave trading

By February 4th, it was far from becoming one. A pullback to 108.50 occurred, but 107.77 was still intact, so there was no reason to abandon the bullish idea.

Buy-and-Hold in the Forex Market

Buy-and-hold” is a strategy typically used by stock market investors, who hope that over time stock prices will reflect the improved results of the underlying companies. It is a tactic rarely applied to Forex pairs, mostly because psychological factors have a much stronger influence on their movement.

In this example, however, holding a long position in USDJPY for two months without attempting to predict the minor fluctuations along the way led to a very good result. Last week, the market closed at 111.48.

USDJPY Elliott Wave buy and hold strategy

Jesse Livermore once said that money is made by sitting, not trading. And indeed, moving in and out of position would have inevitably resulted in a smaller profit than simply holding a position the whole time.

That is the main reason we send premium updates only twice per week. We do not want to encourage frenetic trading, because the only beneficiary of such behavior is the broker, not the trader.

What will USDJPY bring next week? That is the subject of discussion in our next premium analysis due out late Sunday!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

USDCAD and the Anatomy of a Deceiving Correction

In late-September, 2021, USDCAD had already spent over two months in a narrowing sideways range. Despite occasionally breaching the 1.2900 mark during that time, the pair was unable to close a daily session above it. Neither was it able to significantly breach 1.2500. When it comes to narrowing range-bound movements, there is one Elliott Wave…

Read More »

GBPJPY Recovery Takes Shape of an Impulse Pattern

Less than two years ago, during the coronavirus market panic, GBPJPY fell to a multi-year low of 124.04. The last time the pair traded at such levels was in August, 2012, when the world was still recovering from the Financial Crisis. The Covid-19 selloff didn’t last that long though. After plunging 10.9% in March 2020…

Read More »

USDCAD Rises in Predictable Elliott Wave Manner

USDCAD rose significantly this past week, climbing from 1.2512 at the open to as high as 1.2949 Friday. The surge can be attributed to the slide in crude oil prices. Oil and USDCAD are known to have an inverse correlation due to the heavy reliance of the Canada’s economy on the commodity. And while the…

Read More »

Two Months Ahead of the 400-Pip Slide in EURUSD

Economic and fiscal steps taken to help the global economy rebound from the COVID-19 crisis are still in effect in both U.S. and EU. The amount of stimulus by the Fed far eclipsed the measures taken by the ECB. Direct unemployment payments are even creating a labor shortage. Many people prefer to rely on government…

Read More »

Elliott Wave Support Can Send USDZAR 15% Higher

It’s been a bad year for USDZAR bulls. The pair has been declining ever since it reached a high of 19.34 in early-April 2020. As of this writing, it is barely holding above 14.30, down 26% in a little over twelve months. Does this mean now is a good time to join the bears? We…

Read More »

Ahead of EURUSD ‘s Disappointing Start to 2021

Overall, 2020 was a good year for EURUSD bulls. Despite the March crash during the coronavirus-related volatility, the pair ended the year up almost 9%. With more stimulus already in the pipeline at the start of 2021, it made sense to expect further devaluation of the dollar against the Euro. Alas, common sense doesn’t always…

Read More »

USDJPY Gains 450 Pips and Counting in Two Months

2020 wasn’t a good year for USDJPY bulls. Starting from 108.63 in January, the pair closed at 103.32 on December 31st, down 4.9% in twelve months. But what the dollar lost against the yen in the entire 2020 it is now close to recouping in less than three months. USDJPY is approaching 108.50 as of…

Read More »

More analyses