Analysis of Trades and Trading Tips for the Japanese Yen
The test of the 143.05 level occurred when the MACD indicator moved significantly above the zero mark, limiting the pair's upside potential. For this reason, I did not buy the dollar, especially in such a bearish market.
The lack of any hints regarding changes in monetary policy during Powell's speech left investors in a state of uncertainty. Many were hoping for signals of the Federal Reserve's readiness to adopt a more dovish stance, but those expectations were not met, leading to another wave of dollar selling against the yen.
Today, during his speech, Bank of Japan Governor Kazuo Ueda hinted that the central bank might continue slowing the pace of government bond purchases in the next fiscal year. Although cautiously worded, this signal triggered discussions among investors, who were closely watching for any policy shifts by the BoJ. Ueda noted that the current bond-buying program, aimed at supporting financial system stability, could be adjusted based on improvements in the country's economic indicators. He emphasized that the BoJ would act cautiously, considering potential risks to the economy, but did not rule out further reductions in bond purchases if conditions continue to improve.
This statement came just as the board was nearing a decision on bond purchases. However, similar to recent announcements about further rate hikes, major players reacted with yen selling and dollar buying, taking advantage of the speculative demand for the yen that had surged immediately after the statements.
For intraday strategy, I will focus primarily on implementing Scenarios #1 and #2.
Buy Scenario
Scenario #1: Today, I plan to buy USD/JPY when the entry point at 143.28 (green line on the chart) is reached, targeting a rise to the 143.83 level (thicker green line). Around 143.83, I plan to exit the buys and open shorts in the opposite direction (aiming for a 30–35 pip move from the entry point). It's best to return to buying the pair on corrections and significant dips in USD/JPY.
Important: Before buying, ensure the MACD indicator is above the zero line and starting to rise.
Scenario #2: I also plan to buy USD/JPY today if the MACD indicator is in the oversold area and the pair tests the 142.88 level twice consecutively. This would limit the pair's downside potential and lead to a market reversal upward. A rise to the 143.28 and 143.83 levels can be expected.
Sell Scenario
Scenario #1: I plan to sell USD/JPY today only after breaking below the 142.88 level (red line on the chart), which would lead to a quick decline in the pair. The key target for sellers will be 142.34, where I plan to exit the sales and immediately open buys in the opposite direction (aiming for a 20–25 pip move). Selling pressure could return today.
Important: Before selling, ensure the MACD indicator is below the zero line and starting to decline.
Scenario #2: I also plan to sell USD/JPY today if there are two consecutive tests of the 143.28 level when the MACD indicator is in the overbought area. This would limit the pair's upside potential and lead to a market reversal downward. A drop toward 142.88 and 142.34 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.
