Analysis of Trades and Tips for Trading the Japanese Yen
Testing the 150.21 level coincided with the MACD indicator starting to rise from the zero level, confirming a valid entry point for buying the dollar in line with the recent upward trend. As a result, the pair rose by over 60 points, reaching 150.85.
A substantial amount of statistical data is expected in the second half of the day, which could provide further support to the dollar. However, while a positive ISM Services PMI report might bolster the dollar, weaker ADP Employment Change data could offset this effect. It is unclear which metric holds greater weight for the Federal Reserve at the moment.
A strong ISM Services PMI could reinforce confidence in economic stability and provide additional support to the dollar. Conversely, disappointing ADP employment data could unsettle market sentiment, especially if the results fall below forecasts. A decline in employment or mixed data could raise questions about the Fed's next steps.
While inflation and unemployment remain key priorities for the Fed, it is difficult to predict which will play a decisive role in determining future rate hikes. These topics are expected to feature prominently in Jerome Powell's speech later today, which may clarify the Fed's strategy in addressing inflationary pressures and labor market challenges.
For today's intraday strategy, I plan to focus on implementing Scenarios 1 and 2.
Buy Signal
Scenario 1: Buying USD/JPY is recommended if the price reaches the 151.14 level (green line on the chart), targeting a rise to 152.06 (thicker green line on the chart). At 152.06, I plan to exit buys and open sales in the opposite direction, anticipating a 30–35 point pullback. The pair's upward movement depends on strong data.Important! Before buying, ensure the MACD indicator is above the zero level and just beginning to rise.
Scenario 2: Another buying opportunity arises after two consecutive tests of the 150.65 level, provided the MACD indicator is in the oversold zone. This setup will limit the pair's downward potential and could trigger an upward market reversal. Growth is expected toward the 151.14 and 152.06 levels.
Sell Signal
Scenario 1: Selling USD/JPY is advisable after the 150.65 level is updated (red line on the chart), leading to a quick decline in the pair. The primary target for sellers will be 149.73, where I plan to exit sales and open immediate buys in the opposite direction, expecting a 20–25 point pullback. A stronger correction increases the likelihood of renewed pressure on the pair.Important! Before selling, ensure the MACD indicator is below the zero level and just beginning to fall.
Scenario 2: Another selling opportunity arises after two consecutive tests of the 151.14 level, provided the MACD indicator is in the overbought zone. This will limit the pair's upward potential and likely trigger a downward market reversal. Declines are expected toward the 150.65 and 149.73 levels.
Chart Notes
- Thin Green Line: Entry price for buying the trading instrument.
- Thick Green Line: Projected price for setting a Take Profit or manually locking in profits, as further growth above this level is unlikely.
- Thin Red Line: Entry price for selling the trading instrument.
- Thick Red Line: Projected price for setting a Take Profit or manually locking in profits, as further decline below this level is unlikely.
- MACD Indicator: Guides decisions based on overbought and oversold zones.
Important Notes for Beginner Traders
- Exercise caution when entering the market, especially before the release of significant fundamental reports, as they can lead to sharp price fluctuations.
- Always use stop-loss orders to minimize potential losses. Trading without stop-loss orders can quickly deplete your deposit, especially when trading large volumes without proper money management.
- A clear trading plan, like the one outlined above, is essential for successful trading. Making impulsive decisions based solely on current market conditions is generally a losing strategy for intraday traders.
