Analysis of Trades and Trading Tips for the Japanese Yen
The 144.80 price test occurred when the MACD indicator moved significantly below the zero mark, limiting the pair's downside potential. The second test of 144.80 happened when the MACD was in the oversold zone, which allowed Buy Scenario #2 to unfold. However, the anticipated sharp rise in the dollar never materialized, resulting in losses being fixed.
The U.S. dollar rose sharply against the yen after news broke that Donald Trump announced a 90-day pause on trade tariffs. Markets took this move as a sign of de-escalation in tensions between the U.S. and Japan, triggering a wave of investor optimism. The Japanese yen, traditionally seen as a safe-haven asset, immediately weakened in response. While this tariff pause could stimulate global trade and support economic growth, thus putting pressure on safe-haven assets, it's important to remember that the 90-day break is a temporary measure, and further developments will depend on the outcome of trade negotiations between the two countries.
Today's positive data on Japan's corporate goods price index slightly strengthened the yen against the dollar. Although modest, this upward move offered relief to the Japanese currency, which had faced considerable pressure the day before. Rising input prices often lead to future inflation, which could prompt the Bank of Japan to consider a tighter monetary policy stance. That said, these figures shouldn't be overestimated. The yen's ability to hold its ground will depend on a mix of factors, including further economic data, geopolitical developments, and decisions from the BoJ on its policy direction.
For intraday strategy, I will focus primarily on implementing Scenarios #1 and #2.
Buy Signal
Scenario #1:
Today, I plan to buy USD/JPY at the entry point near 146.88 (green line on the chart), targeting a rise to 147.66 (thicker green line). Around 147.66, I will exit long positions and open shorts in the opposite direction, aiming for a 30–35 pip pullback. It's best to return to buying the pair on corrections or significant dips in USD/JPY.
Important! Before buying, ensure that the MACD indicator is above the zero line and just beginning to rise.
Scenario #2:
I also plan to buy USD/JPY if there are two consecutive tests of 146.38 while the MACD is in oversold territory. This would limit the pair's downside potential and could trigger a reversal. A move toward 146.88 and 147.66 could follow.
Sell Signal
Scenario #1:
I plan to sell USD/JPY only after the price breaks below 146.38 (red line), which could trigger a quick drop. The main target for sellers will be 145.67, where I'll exit short positions and consider buying in the opposite direction, aiming for a 20–25 pip rebound. Downward pressure could return at any moment.
Important! Before selling, ensure the MACD is below the zero line and beginning to decline.
Scenario #2:
I also plan to sell USD/JPY if there are two consecutive tests of 146.88 while the MACD is in the overbought zone. This will limit the upside potential and may lead to a reversal. A drop toward 146.38 and 145.67 could follow.
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.
