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:

GBPUSD To Resume Uptrend Once Correction Ends

The Brexit saga continues as Boris Johnson’s re-election puts Britain firmly on the path of leaving the EU on January 31st 2020. And while the results of the June 2016 referendum caused a crash to 1.1650 by October 2016, GBPUSD is trading near 1.3100 today. The chart below reveals the structure of the recent recovery…

Read More »

GBPCAD Can Reach 1.9000 Before the Bears Return

GBPCAD bulls have been on a roll the past four months. The pair is currently trading above 1.7330, up 9.1% from its early-August low of 1.5875. And while the Forex market is not the place to rely on a trend for very long, it is not uncommon for GBPCAD to make large moves in either…

Read More »

EURAUD Impulse Pattern Keeps the Bulls in Charge

Twenty days ago, EURAUD managed to stop the bleeding and form a bottom at 1.5976. As of this writing the pair trades around 1.6250 after reaching 1.6324 on November 20th. Is the uptrend still in progress or should we prepare for the bears’ return? A look at EURAUD ‘s hourly chart through an Elliott Wave…

Read More »

EURUSD Turns Up Ahead of Brexit Talks Breakthrough

EURUSD is up by 260 pips since the beginning of October. The pair climbed from 1.0879 to 1.1140 in just 14 trading days. The rally appears to be fueled by optimism regarding a possible Brexit deal and the tentative “phase-one” agreement between the US and China. In our opinion, however, there is something more to…

Read More »

USDJPY Pattern Makes More Sense than Politics

The last two weeks were different like night and day for USDJPY traders. The pair fell from 108.47 to 106.48 during the first three days of October and eventually closed the week in negative territory. The last five trading days, on the other hand, told a much different story. Last week, USDJPY rose from 106.66…

Read More »

GBPAUD Elliott Wave Setup Supports the Bears

Between July 30th and August 26th, GBPAUD managed to recover from 1.7561 to 1.8337. Despite the no-deal Brexit prospects, the Australian dollar turned out to be even weaker than its British rival for almost a month. However, GBPAUD is down by roughly 400 pips since August 26th. Traders are probably wondering if this is a…

Read More »

EURUSD Absorbs Economic, Trade War and G-7 News

EURUSD made a new low last week. The pair fell to as low as 1.0963 on Friday adding to the downtrend it has been trading in since February 2018. The last time the European currency traded this low against the greenback was in May 2017. The last few months have been characterized by new lows,…

Read More »

More analyses