Trade Review and Advice on Trading the Japanese Yen
The test of the 147.90 price level occurred when the MACD indicator had just started to move downward from the zero line, confirming a valid entry point for selling the dollar in line with the prevailing trend. As a result, the pair declined by only 15 pips.
During the Asian session today, the Japanese yen showed strength. The dollar came under pressure due to the U.S. government shutdown, triggered by a failure to reach a consensus on funding for the upcoming fiscal period. This, combined with deteriorating global market sentiment, led to a flight from risk and increased demand for safe-haven assets — most notably the yen.
The shutdown has brought confusion and uncertainty to the financial markets, raising concerns about the U.S. economy's growth prospects. Investors fear that a prolonged government closure could slow economic activity and potentially lead to further economic challenges. In such a scenario, the yen — viewed as the currency of a stable and reliable nation — becomes an appealing alternative for capital preservation.
Japanese Manufacturing PMI data did not strongly support the yen, although a positive revision to the index was interpreted as a constructive sign. However, markets seem to have already priced in expectations of improved Japanese economic performance. For the yen to strengthen further, more significant catalysts will be needed. Investors remain focused on developments in the U.S. and any potential signals from the Bank of Japan regarding a possible rate hike before the end of the year.
As for the intraday strategy, I will focus more on implementing scenarios #1 and #2.
Buy Scenario
Scenario #1: I plan to buy USD/JPY today upon reaching the entry point around 147.67 (green line on the chart) with an upside target of 148.15 (thicker green line). Around 148.15, I plan to exit my buy positions and open sell positions in the opposite direction, expecting a 30–35 pip pullback. Buying the pair is best done on corrections and deep dips in the USD/JPY exchange rate. Important! Before buying, ensure the MACD indicator is above zero and is just starting to rise from that level.
Scenario #2: I also plan to buy USD/JPY in the case of two consecutive tests of the 147.23 level when the MACD is in the oversold zone. This would suggest limited downside potential and a likely reversal back up. Expected targets are the opposing levels at 147.67 and 148.15.
Sell Scenario
Scenario #1: I plan to sell USD/JPY only after a breakout below the 147.23 level (red line on the chart), which could result in a quick decline in the pair. The main target for sellers will be 146.66, where I plan to exit short positions and switch to long trades for a potential bounce of 20–25 pips. Selling is more effective from higher levels. Important! Before selling, ensure that the MACD is below zero and is just beginning its downward move.
Scenario #2: I also plan to sell the pair today if there are two consecutive tests of the 147.67 level while the MACD is in the overbought area. This would cap the pair's upside and could trigger a reversal to lower levels. In this case, a drop toward the opposite levels at 147.23 and 146.66 may follow.
What's on the Chart:
Thin green line – entry price at which the instrument can be bought.
Thick green line – suggested price for taking profit or manually securing profits, as further growth above this level is unlikely.
Thin red line – entry price at which the instrument can be sold.
Thick red line – suggested price for taking profit or manually securing profits, as further decline below this level is unlikely.
MACD indicator: When entering the market, it is important to refer to overbought and oversold areas.
Important. Beginner forex traders should exercise extreme caution when making entry decisions. Before important fundamental reports, it is best to stay out of the market to avoid sharp price swings. If you decide to trade during the release of news, always use stop-loss orders to minimize losses. Without stop-losses, you can quickly lose your entire deposit, especially if you don't use money management and trade large volumes. And remember: for successful trading, you need a clear trading plan, as I described above. Making spontaneous trading decisions based on the current market situation from moment to moment is a losing strategy for an intraday trader.
