Analysis of Trades and Tips for Trading the Japanese Yen
The test of the price at 159.35 coincided with the moment when the MACD indicator was just beginning to move down from the zero mark, confirming it as a correct entry point for selling the dollar, resulting in a drop of more than 70 pips.
Yesterday, President Donald Trump issued a directive to postpone the planned strikes on Iranian energy targets for a week, which sparked buying of the yen and a decline in the US dollar. However, this does not fundamentally change the market situation, as the end of the military conflict is still far off.
Today, in Asian financial markets, investors are focusing on macroeconomic data from Japan. The mixed signals received today created an ambiguous picture. The morning data on the business activity index for the manufacturing sector of Japan turned out to be somewhat disappointing, showing a weakening at 51.4 points, which indicates a slowdown in growth rates in the industrial sector. This trend could raise concerns about export prospects and the overall production capacity of a country that has traditionally been a locomotive of the Japanese economy. However, the situation took a more optimistic turn following the publication of results for the services sector business activity index. This indicator rose to 52.5 points, exceeding economists' forecasts. The high value indicates sustained consumer demand and positive sentiment in the services sector.
Regarding the intraday strategy, I will primarily rely on implementing scenarios No. 1 and No. 2.
Buy Scenarios
Scenario 1: I plan to buy USD/JPY today when it reaches an entry point around 158.77 (the green line on the chart), targeting a move to 159.14 (the thicker green line on the chart). At 159.14, I plan to exit the long positions and open short positions in the opposite direction (expecting a 30-35-pip move back from the level). It is best to return to buying the pair during corrections and significant pullbacks in USD/JPY. Important! Before buying, ensure the MACD indicator is above the zero mark and just beginning its rise.
Scenario 2: I also plan to buy USD/JPY today in the event of two consecutive tests of the price 158.58 when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to an upward market reversal. An increase towards opposing levels of 158.77 and 159.14 can be anticipated.
Sell Scenarios
Scenario 1: I plan to sell USD/JPY today only after updating the 158.58 level (red line on the chart), which will trigger a rapid decline in the pair. The key target for sellers will be the 158.29 level, where I plan to exit the shorts and immediately buy back in the opposite direction (expecting a 20-25-pip move back 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 in the event of two consecutive tests of the price 158.77 when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward market reversal. A decrease towards opposing levels of 158.58 and 158.29 can be expected.
What's on the Chart:
- The thin green line represents the entry price at which you can buy the trading instrument;
- The thick green line is the assumed price where you can set Take Profit or manually take profit, as further growth above this level is unlikely;
- The thin red line indicates the entry price at which you can sell the trading instrument;
- The thick red line is the assumed price where you can set Take Profit or manually take profit, as further decline below this level is unlikely;
- The MACD indicator. When entering the market, it's important to refer to the overbought and oversold zones.
Important: Beginner traders in the forex market need to make entry decisions very carefully. It is best to stay out of the market before the release of important fundamental reports to avoid sharp fluctuations in prices. If you choose to trade during the release of news, always set Stop Loss orders to minimize losses. Without placing Stop Loss orders, you can quickly lose your entire deposit, especially if you do not use money management and trade large volumes.
And remember, successful trading requires a clear trading plan, like the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.
