Analysis of Trades and Trading Tips for the Japanese Yen
The first test of the 156.27 level occurred when the MACD indicator had risen significantly above the zero mark, limiting its upward potential. For this reason, I refrained from buying the dollar. The second test of 156.27 shortly thereafter coincided with the MACD being in the overbought zone, confirming a valid entry point for selling the dollar. This resulted in a decline of the pair by more than 50 pips.
The yen continues to exhibit high volatility after the Bank of Japan raised the key interest rate to its highest level in 17 years. The Bank's stance on inflation has heightened expectations of further rate hikes, providing support for the yen. However, this support was short-lived, and the dollar quickly recovered some of its losses. Further growth was constrained by weak U.S. data released at the end of last week. As a result, trading is likely to remain within a broad horizontal channel, with the lower boundaries near last week's lows.
Regarding the intraday strategy, I will primarily rely on the execution of Scenario #1 and Scenario #2.
Buy Signal
Scenario #1: Today, I plan to buy USD/JPY at the 156.27 level (green line on the chart), targeting a rise to 157.05 (thicker green line). At 157.05, I plan to exit buy positions and open sell positions in the opposite direction (expecting a 30–35-pip downward movement from this level). The best approach is to re-enter buying positions during corrections or significant pullbacks in USD/JPY. Important! Before buying, ensure that the MACD indicator is above the zero mark and just starting to rise.
Scenario #2: I also plan to buy USD/JPY if there are two consecutive tests of the 155.69 level, with the MACD indicator in the oversold zone. This will limit the pair's downside potential and trigger an upward market reversal. A rise toward the 156.27 and 157.05 levels can be expected.
Sell Signal
Scenario #1: I plan to sell USD/JPY only after the 155.69 level is broken (red line on the chart), likely triggering a quick decline. The key target for sellers will be 155.00, where I plan to exit sell positions and immediately open buy positions in the opposite direction (expecting a 20–25-pip upward movement from this level). Pressure on the pair may return at any moment. Important! Before selling, ensure that the MACD indicator is below the zero mark and just starting to decline.
Scenario #2: I also plan to sell USD/JPY if there are two consecutive tests of the 156.27 level, with the MACD indicator in the overbought zone. This will limit the pair's upward potential and trigger a market reversal downward. A decline toward the 155.69 and 155.00 levels can be expected.
Chart Notes
- Thin green line: Entry price for buying the trading instrument.
- Thick green line: A suggested target for 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: A suggested target for Take Profit or manually locking in profits, as further decline below this level is unlikely.
- MACD Indicator: Critical for identifying overbought and oversold zones to guide market entry decisions.
Important Note for Beginner Traders
- Always approach market entry decisions cautiously.
- Avoid trading during major news releases to sidestep volatile price swings.
- If trading during news releases, always set stop-loss orders to minimize losses.
- Trading without stop-loss orders or money management practices can quickly deplete your deposit, especially when using large volumes.
- A clear trading plan, like the one outlined above, is essential for successful trading. Spontaneous trading decisions based on current market conditions are inherently disadvantageous for intraday traders.
