Analysis of Trades and Trading Tips for the Japanese Yen
The test of the 142.32 level occurred when the MACD indicator had already moved significantly above the zero mark, which, in my view, limited the pair's upside potential. For this reason, I did not buy the dollar and missed a fairly strong upward movement. The entry point for the short position at 141.81 coincided with the beginning of a downward movement in MACD from the zero level, but no strong downside move followed.
Yesterday afternoon, demand for the US dollar recovered, and the yen dropped, driven by positive news about activity in the US manufacturing and services sectors. The manufacturing PMI exceeded economists' forecasts, indicating a return to growth in industrial production. The services sector also demonstrated stability, reinforcing the overall perception of economic strength. The further dynamics of the USD/JPY pair will depend on upcoming economic data and statements from Federal Reserve and Bank of Japan officials.
Today's positive data on the Corporate Services Price Index growth in Japan provided some short-term support for the yen. However, given the broader global economic picture and Japan's internal challenges, this support will likely be short-lived. The outlook for the Japanese economy remains uncertain due to US trade tariffs. On the one hand, there is moderate corporate growth and some increase in domestic demand. On the other hand, high tariffs and the lack of a trade deal could negatively impact Japan's GDP growth as early as this summer.
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 at 143.03 (green line on the chart), with a target at 143.72 (thicker green line). Around 143.72, I plan to exit long positions and open short ones in the opposite direction (anticipating a 30–35 pip pullback). It's best to return to buying the pair during corrections and deeper pullbacks in USD/JPY.
Important! Before buying, ensure the MACD indicator is above the zero mark and beginning to rise.
Scenario #2: I also plan to buy USD/JPY today if the price tests the 142.66 level twice in a row while the MACD indicator is in the oversold zone. This would limit the downside potential and likely lead to an upward reversal. A move toward the opposite levels of 143.03 and 143.72 can be expected.
Sell Signal
Scenario #1: I plan to sell USD/JPY today only after the price breaks below 142.66 (red line on the chart), which would trigger a quick decline. The key target for sellers will be 142.07, at which point I plan to exit short positions and immediately open long positions in the opposite direction (anticipating a 20–25 pip rebound).
Important! Before selling, ensure the MACD indicator is below the zero mark and just starting to fall from it.
Scenario #2: I also plan to sell USD/JPY today in case of two consecutive tests of the 143.03 level while the MACD indicator is in the overbought zone. This would cap the pair's upside potential and likely trigger a reversal downward. A move toward the opposite levels of 142.66 and 142.07 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.
