Trade Analysis and Tips for Trading the Japanese Yen
The price test at 157.02 occurred when the MACD indicator had moved significantly above the zero mark, limiting the pair’s upward potential. For this reason, I did not buy the dollar. The second test at 157.02 led to the implementation of sell Scenario #2 for the dollar, resulting in a 20-pip decline in the pair.
However, the dollar’s rise against the yen continued after a strong ISM report showed an acceleration in U.S. manufacturing to the highest level in over four years. The index rose to 55.6 percent from June’s 53.3 percent, exceeding the consensus forecast of around 54 percent, and a value above 50 points confirmed the sector’s expansion. Strong data reinforced expectations of a hawkish Federal Reserve policy and raised U.S. bond yields, providing support for the dollar. The Japanese yen felt this pressure particularly sharply since it is most sensitive to yield differentials. Such a rapid rise in the pair has once again intensified discussion of currency intervention, as the sharp weakening of the national currency has repeatedly forced the Bank of Japan to intervene in the market for support.
Regarding intraday strategy, I will focus more on implementing Scenarios #1 and #2.
Buy Scenarios
Scenario #1: I plan to buy USD/JPY today at an entry price around 157.91 (green line on the chart), with a target of 158.37 (thicker green line on the chart). At around 158.37, I plan to exit the long positions and open short positions in the opposite direction (expecting a movement of 30-35 pips in the opposite direction from this 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 157.57, with the MACD indicator in the oversold area. This will limit the pair’s downside potential and lead to an upward market reversal. Growth can be expected toward the opposite levels of 157.91 and 158.37.
Sell Scenarios
Scenario #1: I plan to sell USD/JPY today only after a breakout below 157.57 (red line on the chart), which will trigger a quick decline in the pair. The key target for sellers will be 157.07, where I plan to exit the sell and immediately open a buy in the opposite direction (expecting a move of 20-25 pips in the opposite direction from this level). Sellers will return at any moment; all that is needed is any 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 at 158.37 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 decline can be expected toward the opposite levels of 157.57 and 157.07.
What the Chart Shows:
- Thin green line – entry price for buying the trading instrument;
- Thick green line – estimated price where take profit can be set, or profit can be realized, as further growth above this level is unlikely;
- Thin red line – entry price for selling the trading instrument;
- Thick red line – estimated price where take profit can be set, or profit can be realized, as further decline below this level is unlikely;
- MACD Indicator. When entering the market, it is important to be guided by overbought and oversold zones.
Important: Beginner forex traders need to make entry decisions very cautiously. Before key fundamental reports are released, it is best to stay out of the market to avoid sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without placing stop orders, you can quickly lose your entire deposit, especially if you do not practice money management and trade large volumes.
And remember, successful trading requires a clear trading plan, as outlined above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.
