Trade analysis and tips for trading the Japanese yen

The test of the 159.22 level occurred when the MACD indicator was just beginning to move downward from the zero line, confirming a valid entry point for selling the dollar. However, after a decline of 10 points, the pressure faded.

Further downward potential for USD/JPY may be limited by the release of positive U.S. macroeconomic data. The focus will be on weekly ADP employment changes and pending home sales. Strengthening of the dollar, driven by strong data, will be a key factor that could prevent further decline in USD/JPY. It is worth noting that the Japanese yen is typically sensitive to changes in expectations regarding monetary policy, and with the upcoming meeting of the Bank of Japan, there are unlikely to be many willing to continue selling the yen under current conditions. Signals of more active rate hikes from the regulator could lead to a sharp drop in USD/JPY. However, if today's data exceeds expectations, it may restore temporary demand for the dollar, opening the way for further growth of USD/JPY toward the 160 level.

As for intraday strategy, I will rely more on implementing Scenarios No. 1 and No. 2.

Buy signal

Scenario No. 1: I plan to buy USD/JPY today upon reaching the entry point around 159.19 (green line on the chart), with a target at 159.50 (thicker green line). Around 159.50, I plan to exit long positions and open short positions in the opposite direction (expecting a 30–35 point move). Growth in the pair can be expected after strong data.Important: Before buying, make sure the MACD indicator is above the zero line and just beginning to rise.

Scenario No. 2: I also plan to buy USD/JPY if there are two consecutive tests of the 159.07 level while the MACD indicator is in the oversold zone. This will limit the pair's downward potential and lead to an upward reversal. Growth toward 159.19 and 159.50 can be expected.

Sell signal

Scenario No. 1: I plan to sell USD/JPY after a break below 159.07 (red line on the chart), which may lead to a quick decline. The key target for sellers will be 158.76, where I plan to exit short positions and open long positions in the opposite direction (expecting a 20–25 point move). Pressure on the pair may return if the data is very weak.Important: Before selling, make sure the MACD indicator is below the zero line and just beginning to decline.

Scenario No. 2: I also plan to sell USD/JPY if there are two consecutive tests of the 159.19 level while the MACD indicator is in the overbought zone. This will limit the pair's upward potential and lead to a downward reversal. A decline toward 159.07 and 158.76 can be expected.

Chart explanation

• Thin green line – entry price for buying
• Thick green line – suggested Take Profit level or area to lock in profits, as further growth above this level is unlikely
• Thin red line – entry price for selling
• Thick red line – suggested Take Profit level or area to lock in profits, as further decline below this level is unlikely
• MACD indicator – use overbought and oversold zones when making entry decisions

Important

Beginner Forex traders should be very cautious when making entry decisions. Before major fundamental reports are released, it is best to stay out of the market to avoid sharp price fluctuations. If you choose to trade during news releases, always place stop-loss orders to minimize losses. Without stop-losses, you can quickly lose your entire deposit, especially if you trade large volumes without proper risk management.

Remember, successful trading requires a clear trading plan like the one outlined above. Spontaneous trading decisions based on current market conditions are generally a losing strategy for intraday traders.