Trade Analysis and Tips for Trading the Japanese Yen
The price test at 154.55 during the first half of the day coincided with the MACD indicator moving significantly below the zero mark, limiting the pair's bearish potential. For this reason, I did not sell the dollar, even considering recent statements from the Governor of the Bank of Japan, Kuroda. The narrowing gap between the policies of the US Federal Reserve and the Bank of Japan continues to affect market volatility. However, the US dollar remains dominant, despite Japanese policymakers' efforts to counteract its strength.
The growing correlation between the Federal Reserve's and the Bank of Japan's policies is prompting investors to reassess their expectations. As the Fed shows confidence in its rate decisions and Japan maintains monetary stimulus, uncertainty increases. This leads to volatility in financial markets as traders adapt to rapidly changing conditions. The yen's strength is largely indicated by statements from Japanese officials emphasizing their commitment to a more hawkish monetary policy. However, despite Japan's ambitions to strengthen its currency, the yen continues to weaken, creating additional opportunities for the US dollar. High inflation in the US and the Fed's potential decision to maintain current monetary policy further increase the dollar's appeal among investors. Fresh US labor market data should highlight the strength of the US economy, supporting further dollar gains. For intraday strategy, I will focus on scenarios #1 and #2.
Buy Signal
Scenario #1:I plan to buy USD/JPY today if the price reaches 154.64 (green line on the chart), targeting a rise to 155.20 (thicker green line on the chart). At 155.20, I will close long positions and initiate short positions, targeting a 30-35 point reversal. The pair may continue rising as part of a new upward trend.Note: Before buying, ensure the MACD indicator is above the zero mark and beginning to rise.
Scenario #2:I will also buy USD/JPY today if there are two consecutive tests of the 154.34 price, with the MACD indicator in the oversold area. This should limit the pair's downward potential and trigger an upward reversal toward resistance levels at 154.64 and 155.20.
Sell Signal
Scenario #1:I plan to sell USD/JPY today after the price breaks below 154.34 (red line on the chart), triggering a quick decline in the pair. The key target for sellers will be 153.72, where I will close short positions and immediately open long positions, targeting a 20-25 point reversal. Sellers are likely to respond if the Fed adopts a hawkish stance.Note: Before selling, ensure the MACD indicator is below the zero mark and beginning to decline.
Scenario #2:I will also sell USD/JPY today if there are two consecutive tests of the 154.64 price, with the MACD indicator in the overbought area. This should limit the pair's upward potential and trigger a downward reversal toward support levels at 154.34 and 153.72.
Chart Overview
- Thin green line: Entry price for buying.
- Thick green line: Estimated Take Profit level or point to lock in profits, as further growth above this level is unlikely.
- Thin red line: Entry price for selling.
- Thick red line: Estimated Take Profit level or point to lock in profits, as further declines below this level are unlikely.
- MACD Indicator: Consider overbought and oversold conditions when entering trades.
Important Tips for Beginners
For beginners in Forex trading, it is crucial to make careful entry decisions. Before the release of key fundamental reports, it is advisable to stay out of the market to avoid sharp fluctuations. If trading during news releases, always use stop-loss orders to minimize potential losses. Without stop-loss orders, you risk depleting your capital, especially when trading large volumes without proper money management. A clear trading plan, like the one above, is essential for success. Spontaneous trading decisions based on current market conditions often lead to losses for intraday traders.
