Analysis of Trades and Trading Tips for the Japanese Yen
The test of the 142.77 price level occurred at a time when the MACD indicator had already moved significantly below the zero line, which limited the pair's downside potential. For this reason, I did not sell the dollar.
Today, Bank of Japan Governor Kazuo Ueda expressed support for the yen by clearly stating his intention to continue raising interest rates if the economy improves as expected. Ueda said he would adjust the degree of monetary policy easing as necessary. This would ensure that the bank achieves its sustainable inflation target. However, he did not specify when this policy adjustment might occur, negatively affecting the yen's exchange rate.
Ueda's comments had a noticeable impact on the yen, but—as is often the case—not in the direction many anticipated. The currency sharply weakened against the U.S. dollar and other major currencies, reflecting investor skepticism about the BoJ's future policy stance. However, it is important to note that the yen's future largely depends on Japan's actual economic data and the outcome of a trade agreement with the U.S. If the Japanese economy continues to show signs of sustainable growth and inflation, the BoJ is likely to continue tightening, which would support the yen. Conversely, if the economy encounters difficulties, the BoJ may delay or slow down policy normalization, which could pressure the yen.
For intraday strategy, I will focus primarily on implementing Scenarios #1 and #2.
Buy Scenario
Scenario #1: I plan to buy USD/JPY today if the price reaches 143.29 (green line on the chart), targeting a rise to 143.83 (thicker green line). Around 143.83, I plan to exit long positions and open shorts in the opposite direction (anticipating a 30–35 pip pullback). It's best to return to buying the pair during corrections and sharp USD/JPY pullbacks.
Important! Before buying, ensure the MACD indicator is above the zero line and starting to rise.
Scenario #2: I also plan to buy USD/JPY today if there are two consecutive tests of the 142.77 price level while the MACD is in the oversold zone. This would limit the pair's downside potential and trigger a bullish reversal. A rise toward 143.29 and 143.83 can then be expected.
Sell Scenario
Scenario #1: I plan to sell USD/JPY only after a break below 142.77 (red line on the chart), which would likely lead to a sharp decline in the pair. The key target for sellers would be 141.97, where I plan to exit shorts and immediately go long on the bounce (targeting a 20–25 pip move in the opposite direction). Pressure on the pair may return at any moment.
Important! Before selling, make sure the MACD indicator is below the zero line and beginning to decline.
Scenario #2: I also plan to sell USD/JPY if there are two consecutive tests of the 143.29 level while the MACD is in the overbought zone. This would cap the pair's upside and trigger a bearish reversal. A decline toward 142.77 and 141.97 may then follow.
What's on the Chart:
- The thin green line represents the entry price where the trading instrument can be bought.
- The thick green line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price growth above this level is unlikely.
- The thin red line represents the entry price where the trading instrument can be sold.
- The thick red line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price decline below this level is unlikely.
- The MACD indicator should be used to assess overbought and oversold zones when entering the market.
Important Notes:
- Beginner Forex traders should exercise extreme caution when making market entry decisions. It is advisable to stay out of the market before the release of important fundamental reports to avoid exposure to sharp price fluctuations. If you choose to trade during news releases, always use stop-loss orders to minimize potential losses. Trading without stop-loss orders can quickly wipe out your entire deposit, especially if you neglect money management principles and trade with high volumes.
- Remember, successful trading requires a well-defined trading plan, similar to the one outlined above. Making impulsive trading decisions based on the current market situation is a losing strategy for intraday traders.
