Analysis of Trades and Trading Tips for the Japanese Yen
The price test at 156.55 coincided with the MACD indicator just beginning its upward movement from the zero mark, confirming the correct entry point for buying the dollar. As a result, the pair rose by 15 pips.
The data on the decline in U.S. jobless claims provided some support for the dollar, but the risks of further Federal Reserve rate cuts outweighed that support. This led to another weakening of the dollar and a strengthening of the Japanese yen. Investors continue to lean towards the view that the Fed will be forced to continue easing monetary policy amid slowing economic growth. This explains the growing interest in the Japanese yen. The strengthening of the yen may also be linked to expectations of a change in the Bank of Japan's policy toward raising interest rates by the end of this year.
Today, the BoJ published the core consumer price index, which came in at 2.2%, matching economists' forecasts. However, the match with expectations does not quiet the debates about future monetary policy. Inflation remains above the BoJ's 2% target, increasing the likelihood of more aggressive actions by the central bank. However, the BoJ faces a complex dilemma. On one hand, too rapid a tightening of monetary policy could stifle the already fragile economic recovery. On the other hand, prolonged maintenance of the current accommodative policy could lead to further depreciation of the yen and increased inflation.
Regarding the intraday strategy, I will continue to rely on the implementation of scenarios №1 and №2.
Buy Scenarios
Scenario #1: I plan to buy USD/JPY today when it reaches the entry point around 156.20 (green line on the chart), targeting a move to 156.77 (thicker green line on the chart). At around 156.77, I intend to exit the long positions and open shorts in the opposite direction, aiming for a movement of 30-35 pips in the reverse direction from the level. It is best to return to buying the pair on corrections and significant pullbacks in USD/JPY. Important! Before buying, ensure the MACD indicator is above the zero mark and just starting to rise.
Scenario #2: I also plan to buy USD/JPY today if there are two consecutive tests of 155.82 when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a market reversal upwards. An increase can be expected towards the opposite levels of 156.20 and 156.77.
Sell Scenarios
Scenario #1: I plan to sell USD/JPY today only after updating the level at 155.82 (red line on the chart), which will trigger a rapid decline in the pair. The key target for sellers will be the level of 155.18, where I intend to exit the shorts and immediately open longs in the opposite direction, aiming for a movement of 20-25 pips in the reverse direction from the level. It is better to sell as high as possible. Important! Before selling, ensure the MACD indicator is below the zero mark and just beginning its decline.
Scenario #2: I also plan to sell USD/JPY today if there are two consecutive tests of 156.20 while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a market reversal downwards. A decline can be expected toward the opposite levels of 155.82 and 155.18.
What the Chart Shows:
- Thin Green Line: Entry price for buying the trading instrument.
- Thick Green Line: Estimated price where Take Profit can be set or where profit can be secured, as further increases above this level are unlikely.
- Thin Red Line: Entry price for selling the trading instrument.
- Thick Red Line: Estimated price where Take Profit can be set or where profit can be secured, as further decreases below this level are unlikely.
- MACD Indicator: When entering the market, it is important to be guided by the overbought and oversold zones.
Important: Beginner traders in the Forex market must be very cautious when making trading entry decisions. It is best to remain out of the market before the release of important fundamental reports to avoid getting caught in sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without setting stop orders, you can quickly lose your entire deposit, especially if you do not use money management and trade with large volumes.
And remember that successful trading requires having a clear trading plan, similar to the one I presented above. Spontaneous trading decisions based on the current market situation are inherently a losing strategy for intraday traders.
