Analysis of Trades and Trading Tips for the Japanese Yen
Due to low volatility, the tests of the levels I marked did not occur in the second half of the day. As a result, I was left without trades.
Today, the yen declined against the U.S. dollar on news that the Tokyo Consumer Price Index fell from 2.8% to 2.7%. Conversely, unemployment in Japan remained at 2.6%, despite economists' expectations of a decrease. On the one hand, the slowing inflation in Japan's capital may indicate reduced pressure on the Bank of Japan to tighten monetary policy. It should be noted that for a long time, inflation has been a key factor holding the central bank back from abandoning its ultra-loose monetary policy. A decrease in the growth rate of prices, even if slight, may give the BoJ more room for maneuver and delay interest rate hikes.
The drop in the yen is likely due to traders interpreting the slowdown in inflation as a signal that the BoJ will not rush to change policy at its December meeting. This, in turn, reduces the yen's appeal against the dollar. At the same time, stable unemployment may somewhat mitigate the negative impact on the yen, as it indicates that the economy is not in a recession after all.
In the coming days, the yen is likely to remain under pressure until new economic data emerges that can clarify the situation.
Regarding the intraday strategy, I will rely more on the implementation of Scenarios 1 and 2.
Buy Scenarios
Scenario 1: I plan to buy USD/JPY today upon reaching an entry point around 156.55 (green line on the chart), with a target at 156.94 (thicker green line on the chart). At point 156.94, I plan to exit my long positions and open shorts in the opposite direction (expecting a movement of 30-35 pips in the opposite direction from the level). The best time to return to buying the pair is during corrections and significant pullbacks in USD/JPY. Important! Before purchasing, ensure that the MACD indicator is above the zero mark and is just starting to rise from it.
Scenario 2: I also plan to buy USD/JPY today in case of two consecutive tests of the price 156.16, when the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward market reversal. One can expect growth to opposing levels of 156.55 and 156.94.
Sell Scenarios
Scenario 1: I plan to sell USD/JPY today only after updating the 156.16 level (red line on the chart), which will trigger a quick decline in the pair. The key target for sellers will be the 155.76 level, where I plan to exit my shorts and open longs in the opposite direction (expecting a 20-25-pip move in the opposite direction from the level). It is better to sell as high as possible. Important! Before selling, ensure that the MACD indicator is below the zero mark and is just starting to decline from it.
Scenario 2: I also plan to sell USD/JPY today if the price tests 156.55 twice in a row, when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a market reversal downward. One can expect a decrease to opposing levels of 156.16 and 155.76.
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.
