Analysis of Trades and Tips for Trading the Japanese Yen
The test of the 152.92 level occurred when the MACD indicator was already well below zero, which limited further downward potential for the pair. For this reason, I didn't sell the dollar, especially given the current upward trend. A second test of this level found the MACD in the oversold zone, allowing Scenario #2 for buying to play out. As a result, the pair rose by over 40 points and continued its ascent at the time of writing. Today's U.S. data could further strengthen the pair's upward potential, but this would require the consumer confidence indicator to exceed economists' forecasts, encouraging new purchases. Weak data could quickly turn the market downward. For my intraday strategy, I plan to rely on Scenarios #1 and #2.
Buy Signal
Scenario #1: Today, I plan to buy USD/JPY at the entry point near 153.99 (green line on the chart) with a target of 154.70 (thicker green line on the chart). At 154.70, I plan to close my long position and open a short position, expecting a reversal of 30-35 points. The pair's growth today will likely depend on a continuation of the upward trend. Note: Before buying, ensure the MACD indicator is above zero and just beginning to rise.
Scenario #2: I also plan to buy USD/JPY today if the 153.29 level is tested twice consecutively while the MACD is in the oversold zone. This should curb further downward and could lead to an upward reversal. An increase toward the next resistance levels of 153.99 and 154.70 can be expected.
Sell Signal
Scenario #1: I plan to sell USD/JPY after a break below the 153.29 level (red line on the chart), which is likely to trigger a quick decline. Sellers' main target will be 152.64, where I will exit the short position and immediately open a long position, expecting a reversal of 20-25 points. Downward pressure on the pair may return if U.S. data disappoints. Note: Before selling, ensure the MACD indicator is below zero and just starting to decline.
Scenario #2: I also plan to sell USD/JPY today if the 153.99 level is tested twice consecutively while the MACD is in the overbought zone. This will limit the pair's upward potential and could lead to a downward reversal. A decline to the next support levels at 153.29 and 152.64 can be expected.
Chart Key:
- Thin green line – entry price for buying the trading instrument.
- Thick green line – suggested price for placing Take Profit or manually fixing profit, as further growth above this level is unlikely.
- Thin red line – entry price for selling the trading instrument.
- Thick red line – suggested price for placing Take Profit or manually fixing profit, as further decline below this level is unlikely.
- MACD: When entering the market, it's crucial to consider overbought and oversold levels.
Important: Beginner forex traders should exercise caution when making entry decisions. Before key fundamental reports are released, it's best to stay out of the market to avoid potential volatility. If you decide to trade during news releases, always use stop orders to manage potential losses. Without stop orders, losses could accumulate quickly, especially if you lack a money management strategy and trade in large volumes.
Remember that successful trading requires a clear plan, such as the one I've outlined above. Making spontaneous trading decisions based solely on the current market situation is generally an unprofitable strategy for an intraday trader.
