Trade Review and Tips for Trading the Japanese Yen
The first test of the 163.68 level occurred when the MACD indicator had already moved significantly above the zero line, limiting the pair’s upward potential. The second test of 163.68 coincided with the MACD entering oversold territory, which resulted in the implementation of Scenario No. 2 and a decline in the U.S. dollar.
The sharp strengthening of the yen clearly coincided with currency intervention by the Bank of Japan, especially after the Federal Reserve left interest rates unchanged yesterday. The U.S. session will bring a significant set of U.S. economic data, including second-quarter GDP, the Core Personal Consumption Expenditures (PCE) Price Index, and personal income and spending figures.
The PCE Price Index is particularly important, as it is the Federal Reserve’s preferred inflation gauge and directly influences expectations regarding interest rates and U.S. Treasury yields. GDP and consumer data will provide additional insight into the health of the economy, while markets will primarily focus on strong figures that could restore demand for the dollar.
The Japanese yen is expected to react to these releases. If the data come in weaker than expected, USD/JPY will likely continue declining, while intervention from Japanese authorities could further accelerate the move.
Regarding the intraday strategy, I will primarily focus on implementing Scenario No. 1 and Scenario No. 2.
Buy Signal
Scenario No. 1
I plan to buy USD/JPY today if the entry point is reached near 163.06 (green line on the chart), with a target at 163.70 (thicker green line on the chart). Around 163.70, I plan to close long positions and open short positions in the opposite direction, targeting a 30–35 point move back from the level. A rise in the pair is possible today, but the upward potential remains relatively limited.
Important: Before buying, make sure that the MACD indicator is above the zero line and has just started moving upward from it.
Scenario No. 2
I also plan to buy USD/JPY today if the 162.65 level is tested twice consecutively while the MACD indicator is in oversold territory. This would limit the pair’s downward potential and could trigger a bullish reversal. In this case, the upward targets would be 163.06 and 163.70.
Sell Signal
Scenario No. 1
I plan to sell USD/JPY today after a break below the 162.65 level (red line on the chart), which could lead to a rapid decline in the pair. The key target for sellers will be 162.07, where I plan to close short positions and immediately open long positions in the opposite direction, targeting a 20–25 point rebound from the level. Selling pressure on the pair is likely to return if the Bank of Japan intervenes.
Important: Before selling, make sure that the MACD indicator is below the zero line and has just started moving downward from it.
Scenario No. 2
I also plan to sell USD/JPY today if the 163.06 level is tested twice consecutively while the MACD indicator is in overbought territory. This would limit the pair’s upward potential and could trigger a bearish reversal. In this case, the downward targets would be 162.65 and 162.07.
Chart Legend
- Thin green line – Entry price for buying the trading instrument.
- Thick green line – Suggested Take Profit level or an area to manually lock in profits, as further gains above this level are considered unlikely.
- Thin red line – Entry price for selling the trading instrument.
- Thick red line – Suggested Take Profit level or an area to manually lock in profits, as further declines below this level are considered unlikely.
- MACD Indicator – When entering the market, it is important to consider overbought and oversold zones.
Important
Beginner Forex traders should exercise extreme caution when making decisions about entering the market. Before the release of important fundamental reports, it is best to remain out of the market to avoid exposure to sharp exchange rate fluctuations.
If you decide to trade during major news releases, always place stop-loss orders to minimize potential losses. Without stop-loss protection, you can lose your entire account balance very quickly, especially if you do not use proper money management and trade with large position sizes.
Remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on the current market situation is an inherently losing strategy for an intraday trader.
