Analysis of Trades and Trading Tips for the Japanese Yen
The test of the 149.95 level occurred when the MACD indicator had already moved significantly above the zero mark, which limited the pair's upside potential. As a result, I chose not to buy the dollar and missed a strong move toward the target level of 150.54.
Today, the yen regained some ground against the dollar, although the recovery was not as strong as yesterday's sell-off. This is primarily due to the release of the minutes from the latest Bank of Japan meeting. The minutes indicated that a further rate hike is highly likely. A rate hike is also expected not to rattle markets this time. This forecast is based on several factors, including the resilience of the Japanese economy and the relatively strong market response to previous changes in monetary policy. Economists believe the BOJ has carefully weighed the potential risks and benefits of further tightening and will now act more cautiously. The primary goal remains to keep inflation under control without triggering a recession. Previous rate hikes were met with a strong market reaction, and policymakers are keen to avoid repeating that experience. As a result, the yen reacted rather mildly to the release of the minutes, which may support the continued upward trend in USD/JPY during today's session.
For intraday strategy, I will focus primarily on implementing Scenarios #1 and #2.
Buy Signal
Scenario #1: I plan to buy USD/JPY today upon reaching the entry point around 150.68 (green line on the chart), targeting a rise to 151.19 (thicker green line on the chart). Around the 151.19 level, I intend to exit long positions and open shorts in the opposite direction, expecting a 30–35 pip retracement. The best time to return to buying the pair is during corrections and sharp pullbacks in USD/JPY. Important: Before entering a long position, ensure the MACD indicator is above the zero line and beginning to rise from it.
Scenario #2: I also plan to buy USD/JPY today in the event of two consecutive tests of the 150.22 level while the MACD is in the oversold zone. This will limit the pair's downside potential and may lead to a market reversal to the upside. A move toward the opposite levels of 150.68 and 151.19 can be expected.
Sell Signal
Scenario #1: I plan to sell USD/JPY today only after a breakout below the 150.22 level (red line on the chart), which could lead to a swift decline in the pair. The key target for sellers will be 149.48, where I plan to exit short positions and immediately open long positions in the opposite direction, expecting a 20–25 pip bounce. Selling pressure on the pair could return at any moment. Important: Before entering a short position, ensure the MACD indicator is below the zero line and just beginning to decline.
Scenario #2: I also plan to sell USD/JPY today in the event of two consecutive tests of the 150.68 level while the MACD is in the overbought zone. This will limit the pair's upside potential and may lead to a market reversal to the downside. A move toward the opposite levels of 150.22 and 149.78 can be expected.
What's on the Chart:
- The thin green line represents the entry price where the trading instrument can be bought.
- The thick green line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price growth above this level is unlikely.
- The thin red line represents the entry price where the trading instrument can be sold.
- The thick red line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price decline below this level is unlikely.
- The MACD indicator should be used to assess overbought and oversold zones when entering the market.
Important Notes:
- Beginner Forex traders should exercise extreme caution when making market entry decisions. It is advisable to stay out of the market before the release of important fundamental reports to avoid exposure to sharp price fluctuations. If you choose to trade during news releases, always use stop-loss orders to minimize potential losses. Trading without stop-loss orders can quickly wipe out your entire deposit, especially if you neglect money management principles and trade with high volumes.
- Remember, successful trading requires a well-defined trading plan, similar to the one outlined above. Making impulsive trading decisions based on the current market situation is a losing strategy for intraday traders.
