Analysis of Trades and Trading Tips for the Japanese Yen
The price test at 143.75 occurred when the MACD indicator had already moved significantly above the zero line, which, in my view, limited the pair's upside potential. For this reason, I did not buy the dollar.
Following the publication of the University of Michigan Consumer Sentiment Index, the yen continued to weaken against the US dollar. This index, an important indicator of consumer confidence, exceeded analysts' expectations, strengthening the US currency. Optimistic sentiment among American consumers points to the resilience of the US economy, which in turn increases the dollar's attractiveness as an investment asset.
The strengthening of the dollar against the yen still reflects the difference in monetary policy between the Federal Reserve and the Bank of Japan. However, it is important to remember that the Fed could shift toward policy easing at any moment, while the BOJ maintains a hawkish stance and plans further rate hikes, making the yen more attractive against the dollar in the long term.
In the short term, the USD/JPY pair's dynamics will depend on upcoming economic data from the US and Japan, central bank decisions regarding interest rates, and the progress of a trade agreement between the two countries.
For intraday strategy, I will focus primarily on implementing Scenarios #1 and #2.
Buy Signal
Scenario #1: Today, I plan to buy USD/JPY upon reaching the entry point around 143.90 (green line on the chart), with a target of rising toward the 144.78 level (thicker green line on the chart). Around 144.78, I intend to exit the long positions and immediately open sell positions, aiming for a 30–35 pip pullback from the entry level. It is best to return to buying the pair during corrections and significant pullbacks of USD/JPY.
Important! Before buying, ensure the MACD indicator is above the zero mark and just starting to rise from it.
Scenario #2: I also plan to buy USD/JPY today in case of two consecutive tests of the 143.21 level when the MACD indicator is in the oversold zone. This will limit the pair's downside potential and lead to a market reversal upwards. A rise toward the opposite levels of 143.90 and 144.78 can be expected.
Sell Signal
Scenario #1: Today, I plan to sell USD/JPY only after the 143.21 level is broken (red line on the chart), which will lead to a rapid decline in the pair. The key target for sellers will be 142.38, where I plan to exit sell positions and immediately open buys in the opposite direction (aiming for a 20–25 pip reversal from the level).
Important! Before selling, make sure that the MACD indicator is below the zero mark and just starting to decline.
Scenario #2: I also plan to sell USD/JPY today in case of two consecutive tests of the 143.90 level when the MACD indicator is in the overbought zone. This will limit the pair's upward potential and lead to a market reversal downward. A decline toward the opposite levels of 143.21 and 142.38 can be expected.
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.
