Trade Review and Tips for Trading the Japanese Yen
The price test at 159.81 occurred as the MACD indicator began moving up from the zero line, confirming a good entry point to buy the dollar. As a result, the pair rose by 15 pips.
Yesterday's attempts to stabilize the yen achieved nothing, and today it remains under pressure from a strong dollar. Mimura, responsible for currency policy at Japan's Finance Ministry, said recent moves have been too rapid and warned it is too early to forget the summer events, which apparently led to a small market intervention to "feel out" the situation. However, dollar strength was reinforced by US data and speeches. Initial jobless claims rose only to 200K versus a 195K forecast, while continued claims actually fell. Daly said further tightening will be required because price pressures have spread beyond tariff- and oil-sensitive sectors. Cook (Hammack) confirmed policy needs to move to a restrictive stance, Goolsbee warned of the risk of demand overheating from AI, and Williams called inflation too high even in the latest data. Markets now price 25-bp hikes in December, January and March.
On top of this came a sell-off in Japanese government bonds following US Treasuries, which fell for a second session. Ten-year JGB yields rose 8 bps to 2.87%, and 30-year yields rose 7 bps to 3.99%. Expectations of further Bank of Japan tightening have also returned: swap markets now price in roughly an 87% chance of a move from the current 1.25% by December, up from about 82% yesterday. That is positive for the yen in principle, but it does not save the situation.
For intraday strategy, I will mainly rely on the implementation of Scenarios No. 1 and No. 2.
Scenarios to Buy
Scenario No. 1: I plan to buy USD/JPY today when the entry point around 160.01 (green line on the chart) is reached, targeting a move to 160.23 (thicker green line on the chart). Around 160.23, I will exit long positions and open short positions in the opposite direction (expecting a 30–35 pip move away from the level). It is best to return to buying the pair on corrections and significant pullbacks. Important! Before buying, make sure the MACD indicator is above the zero line and is just beginning to rise from it.
Scenario No. 2: I also plan to buy USD/JPY today if it tests 159.87 twice while the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward reversal. You can expect a rise to the opposite levels of 160.01 and 160.23.
Scenarios to Sell
Scenario No. 1: I plan to sell USD/JPY today only after the 159.87 level is breached (red line on the chart), which will lead to a rapid decline of the pair. The key target for sellers will be 159.63, where I will exit shorts and immediately open longs in the opposite direction (expecting a 20–25 pip move in the opposite direction from the level). Sellers can return at any moment — only a hint from the central bank is needed. Important! Before selling, make sure the MACD indicator is below the zero line and is just beginning to fall from it.
Scenario No. 2: I also plan to sell USD/JPY today in the event of two consecutive tests of 160.01 while the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a downward reversal. You can expect a decline to the opposite levels of 159.87 and 159.63.
What's on the Chart:
Thin green line – the entry price at which you can buy the trading instrument;
Thick green line – the suggested price where you can place a Take Profit or manually lock in gains, since further upside above this level is unlikely;
Thin red line – the entry price at which you can sell the trading instrument;
Thick red line – the suggested price where you can place a Take Profit or manually lock in gains, since further downside below this level is unlikely;
MACD indicator. When entering the market, it is important to follow the overbought and oversold zones.
Important. Beginner Forex traders must be very cautious when making entry decisions. Before the release of important fundamental reports, it is best to stay out of the market to avoid getting caught in sharp price swings. If you decide to trade during news releases, always place stop orders to minimize losses. Without stop orders, you can quickly lose your entire deposit, especially if you don't use money management and trade large volumes.
Remember, successful trading requires a clear trading plan, like the example I presented above. Spontaneous trading decisions based on the current market situation are a losing strategy for an intraday trader from the start.
