Trade analysis and trading advice for the Japanese yen

A test of the 158.68 price level occurred at a moment when the MACD indicator was just beginning to move upward from the zero line, which confirmed a correct entry point for buying the dollar and resulted in a rise of more than 40 points.

Immediately after the Bank of Japan left its interest rate unchanged at 0.75% on Friday, Bank of Japan Governor Kazuo Ueda spoke. He remained committed to his cautious stance regarding the trajectory of interest-rate hikes by the central bank, keeping the policy rate unchanged while raising the inflation forecast. All of this led to a sharp surge in the USD/JPY pair.

In the second half of the day, I am expecting fairly important U.S. data. The Manufacturing PMI will provide insight into the state of the industrial sector. Only a confident increase in the indicator will be able to trigger a new wave of growth in USD/JPY. The Services PMI is also expected to support the dollar. In addition, traders will pay attention to consumer sentiment from the University of Michigan. Rising optimism usually has a positive effect on the U.S. dollar.

As for the intraday strategy, I will rely more on the implementation of scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: Today, I plan to buy USD/JPY when the entry point is reached at the level of 158.25 (green line on the chart), with a growth target at 158.55 (the thicker green line on the chart). Around 158.55, I will exit long positions and open short positions in the opposite direction (expecting a move of 30–35 points in the opposite direction from that level). Continued growth of the pair can be expected in line with the trend.Important! Before buying, make sure that the MACD indicator is above the zero line and is just beginning to rise from it.

Scenario No. 2: I also plan to buy USD/JPY today if there are two consecutive tests of the 158.00 price level at a time when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to an upward market reversal. Growth toward the opposite levels of 158.25 and 158.55 can be expected.

Sell Signal

Scenario No. 1: Today, I plan to sell USD/JPY after a break (update) of the 158.00 level (red line on the chart), which will lead to a rapid decline in the pair. The key target for sellers will be the 157.67 level, where I will exit short positions and also immediately open long positions in the opposite direction (expecting a move of 20–25 points in the opposite direction from that level). Pressure on the pair may return today in the event of weak U.S. data.Important! Before selling, make sure that the MACD indicator is below the zero line and is just beginning to decline from it.

Scenario No. 2: I also plan to sell USD/JPY today if there are two consecutive tests of the 158.25 price level at a time 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 toward the opposite levels of 158.00 and 157.67 can be expected.

What's on the chart:

• Thin green line – entry price at which the trading instrument can be bought;
• Thick green line – estimated price where Take Profit orders can be placed or profits can be manually locked in, as further growth above this level is unlikely;
• Thin red line – entry price at which the trading instrument can be sold;
• Thick red line – estimated price where Take Profit orders can be placed or profits can be manually locked in, as further decline below this level is unlikely;
• MACD indicator – when entering the market, it is important to focus on overbought and oversold zones.

Important. Beginner Forex traders should make market entry decisions very cautiously. Before the release of major fundamental reports, it is best to stay out of the market to avoid sharp price fluctuations. If you decide to trade during news releases, always place stop-loss orders to minimize losses. Without stop-loss orders, you can very quickly lose your entire deposit, especially if you do not use proper money management and trade large volumes.

And remember that successful trading requires a clear trading plan, like the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for an intraday trader.