Trade Analysis and Tips for Trading the Japanese Yen

The test of the 159.10 price level occurred when the MACD indicator had moved significantly below the zero mark, which, in my opinion, limited the pair's downside potential.

Yesterday's sharp yen rise was a clear indication of the Bank of Japan's active interventions. The attempt to support the weakened national currency met with temporary success: the yen strengthened significantly against the US dollar and other major currencies. However, as is often the case after such government interventions, the achieved effect is likely to be short-lived.

The main reasons for such caution lie in the fundamental factors that continue to weigh on the yen. The gap in interest rates between Japan and other major economies, such as the US, remains significant. While the Bank of Japan maintains a wait-and-see policy, other central banks are preparing to raise interest rates. Interventions can only temporarily curb the decline, but do not eliminate the root causes of weakening.

Thus, the likelihood increases that Japan will again resort to direct intervention in the currency market. However, it will act, as before, in the vicinity of the 160 level, to which there is still room to grow. For this reason, the optimal strategy at the moment becomes buying dollars on corrections and pullbacks with the aim of returning the USD/JPY pair to the level of 160 yen.

Regarding the intraday strategy, I will rely more on implementing Scenarios #1 and #2.

Buy Scenarios

Scenario #1: I plan to buy USD/JPY today at the entry point around 157.36 (green line on the chart), with a target at 157.90 (thicker green line on the chart). At around 157.90, I intend to exit my long positions and open short positions in the opposite direction (expecting a movement of 30-35 pips in the opposite direction from the level). It is best to return to buying the pair on corrections and serious pullbacks in USD/JPY. Important! Before buying, ensure that the MACD indicator is above the zero mark and just starting to rise from it.

Scenario #2: I also plan to buy USD/JPY today if there are two consecutive tests of 157.11 while the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward market reversal. A rise to the opposite levels of 157.36 and 157.90 can be expected.

Sell Scenarios

Scenario #1: I plan to sell USD/JPY today only after updating the level to 157.11 (red line on the chart), which will trigger a rapid decline in the pair. The key target for sellers will be the 156.69 level, where I intend to exit my shorts and open immediate longs in the opposite direction (expecting a 20-25-pip move in the opposite direction from the level). Sellers may return at any moment, needing only a hint from the central bank. Important! Before selling, ensure that the MACD indicator is below the zero mark and just starting to decline from it.

Scenario #2: I also plan to sell USD/JPY today if there are two consecutive tests of 157.36 while the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a market reversal downward. A decline to the opposite levels of 157.11 and 156.69 can be expected.

What is on the Chart:

• The thin green line – entry price at which the trading instrument can be bought;
• The thick green line – approximate price where take profit can be set or to realize profit, as further growth above this level is unlikely;
• The thin red line – entry price at which the trading instrument can be sold;
• The thick red line – approximate price where take profit can be set or to realize profit, 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 traders in the Forex market need to make entry decisions very cautiously. It is best to stay out of the market before important fundamental reports 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 use money management and trade in large volumes.

And remember, for successful trading, it is essential to have a clear trading plan, as outlined above. Making impulsive trading decisions based on the current market situation is fundamentally a losing strategy for an intraday trader.