Trade Analysis and Tips for the Japanese Yen
The test at 163.66 coincided with the moment when the MACD indicator moved significantly above the zero mark, limiting the pair's bullish potential. For this reason, I did not buy the dollar.
Yesterday, the dollar regained its attractiveness against the yen, reflecting a shift in market expectations towards further interest rate hikes by the Federal Reserve. However, today's rise in the Bank of Japan's core consumer price index to 1.5% also strengthened market participants' expectations for a forthcoming interest rate increase by the Japanese central bank, limiting the bullish potential of the USD/JPY pair. An additional restraining factor is the risk of currency intervention, as the Bank of Japan has previously taken measures to support the yen during excessive weakening. The rising expectations for interest rates only heighten traders' caution about going long on USD/JPY.
Regarding the intraday strategy, I will mainly focus on implementing scenarios #1 and #2.
Buying Scenarios
Scenario #1: I plan to buy USD/JPY today at an entry point around 163.79 (green line on the chart), with a target at 164.04 (thicker green line on the chart). Around 164.04, I plan to exit long positions and open short positions in the opposite direction (expecting a move of 30-35 pips in the opposite direction from the level). It is best to return to buying the pair during corrections and significant pullbacks of USD/JPY. Important! Before buying, ensure that the MACD indicator is above the zero mark and is just starting to rise from there.
Scenario #2: I also plan to buy USD/JPY today in the event of two consecutive tests of the price 163.61 when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a market reversal upwards. A rise to the opposite levels of 163.79 and 164.04 can be expected.
Selling Scenarios
Scenario #1: I plan to sell USD/JPY today only after the level of 163.61 is updated (red line on the chart), which will lead to a rapid decline in the pair. The key target for sellers will be 163.38, where I intend to exit shorts and immediately open longs in the opposite direction (expecting a move of 20-25 pips in the opposite direction from the level). Sellers could return at any moment; all it takes is a hint from the central bank. Important! Before selling, ensure that the MACD indicator is below the zero mark and is just starting to decline from there.
Scenario #2: I also plan to sell USD/JPY today in the case of two consecutive tests of the price 163.79 when the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a market reversal downwards. A decline to the opposite levels of 163.61 and 163.38 can be expected.
What's on the Chart:
- Thin green line – entry price for buying the trading instrument;
- Thick green line – estimated price for placing Take Profit or manually securing profits, as further growth above this level is unlikely;
- Thin red line – entry price for selling the trading instrument;
- Thick red line – estimated price for placing Take Profit or manually securing profits, as further decline below this level is unlikely;
- MACD Indicator. When entering the market, it is important to be guided by the zones of overbought and oversold.
Important: New traders in the Forex market should make decisions about market entry very cautiously. Before the release of important fundamental reports, it is best to stay out of the market to avoid sharp fluctuations in the exchange rate. 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, for successful trading, it is essential to have a clear trading plan, like the one outlined above. Spontaneous trading decisions based on the current market situation are inherently a losing strategy for intraday traders.
