Analysis of trades and tips for trading the Japanese yen
The test of the 141.77 price level occurred when the MACD indicator had already moved significantly upward from the zero mark, limiting the pair's upward potential. The second test of this price level occurred shortly afterward, when the MACD was in the overbought zone, confirming the correct entry point for selling the dollar according to scenario #2. As a result, the pair dropped by almost 20 points, but the pressure then subsided. Data on building permits and housing starts is expected in the second half of the day. Additionally, the FOMC decision on the key interest rate, the accompanying statement, and the economic forecast will be released. However, the key event will be the press conference by Fed Chairman Jerome Powell. A dovish stance from the Fed will lead to another dollar sell-off, pushing USD/JPY towards monthly lows. As for the intraday strategy, I plan to act based on the implementation of scenario #1, despite the MACD indicator readings, as I expect strong and directional movement.
Buy Signal
Scenario #1: Today, I plan to buy USD/JPY when the entry point around 142.00 (green line on the chart) is reached, targeting a rise to 143.33 (thicker green line on the chart). At 143.33, I will exit long positions and open short positions in the opposite direction, aiming for a 30-35 point move from the entry level. You can expect a rise in the pair today only if the Fed takes a hawkish stance. Note: Before buying, make sure 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 if there are two consecutive tests of the 141.43 price level when the MACD indicator is in the oversold zone. This will limit the pair's downward potential and lead to an upward market reversal. You can expect a rise to the levels of 142.00 and 143.33.
Sell Signal
Scenario #1: I plan to sell USD/JPY today after breaking the 141.43 level (red line on the chart), which will lead to a quick decline in the pair. The key target for sellers will be 139.83, where I will exit short positions and immediately buy the pair in the opposite direction, aiming for a 20-25 point move from the level. Selling pressure on the pair will return if the Fed cuts rates by half a percent. Note: Before selling, make sure the MACD indicator is below the zero mark and just starting to fall from it.
Scenario #2: I also plan to sell USD/JPY today if there are two consecutive tests of the 142.00 price 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. You can expect a decline to the support levels of 141.43 and 139.83.
What's on the chart:
- Thin green line – entry price for buying USD/JPY.
- Thick green line – the estimated price where you can place Take Profit or manually fix profit, as further growth above this level is unlikely.
- Thin red line – entry price for selling USD/JPY.
- Thick red line – the estimated price where you can place Take Profit or manually fix profit, as further decline below this level is unlikely.
- MACD indicator: When entering the market, it's important to use overbought and oversold zones.
Important: Beginner forex traders should be very cautious when making decisions about entering the market. It's best to stay out of the market before major reports are released to avoid sharp price swings. If you trade during news releases, always set stop orders to minimize losses. Without stop orders, you can quickly lose your entire deposit, especially if you're not using money management and trading with large volumes.
Keep in mind that successful trading requires a clear trading plan, like the one presented above. Spontaneous trading decisions based on the current market situation often result in losses for intraday traders.
