Trade Analysis and Tips for Trading the Japanese Yen

The test of the 157.96 price level occurred at a moment when the MACD indicator had already moved significantly below the zero line, which limited the pair's downward potential.

The Japanese yen received some temporary relief against the U.S. dollar following news that the U.S. Department of Justice had initiated criminal proceedings against the head of the Federal Reserve. Investors, alarmed by developments surrounding the head of the U.S. regulator, rushed to pull assets out of the dollar, as a result of which the yen strengthened temporarily. However, this short-term appreciation of the yen may turn out to be only a temporary phenomenon that does not reflect long-term trends. Fundamental factors, as well as the economic outlook of both countries, will continue to have a significant impact on the currency pair. Moreover, the criminal prosecution of the Fed Chair creates additional uncertainty in the market.

During the U.S. trading session, attention will shift to a speech by FOMC member Thomas Barkin. He is expected to comment on the recent decline in unemployment in the United States. His remarks may provide insight into the Federal Reserve's future actions regarding interest rates. Market participants and analysts will closely examine his every word, seeking to understand how sustainable the decline in unemployment is and how it may affect inflationary processes. If Barkin emphasizes that falling unemployment is not the sole determining factor for Fed policy and that the regulator will continue to monitor other economic indicators such as inflation and GDP dynamics, the dollar may face some pressure and continue to lose ground against the yen.

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

Buy Signal

Scenario No. 1: I plan to buy USD/JPY today upon reaching the entry point around 158.00 (green line on the chart), with a target of growth toward 158.39 (thicker green line on the chart). Around 158.39, 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 the level). Continued growth of the pair can be expected in line with the trend.Important! Before buying, make sure 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 in the event of two consecutive tests of the 157.76 price level when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a market reversal upward. Growth toward the opposite levels of 158.00 and 158.39 can be expected.

Sell Signal

Scenario No. 1: I plan to sell USD/JPY today after an update of the 157.76 level (red line on the chart), which will lead to a rapid decline in the pair. The key target for sellers will be the 157.37 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 the level). Pressure on the pair will return today in the event of a dovish stance by the Fed.Important! Before selling, make sure 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 in the event of two consecutive tests of the 158.00 price level when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a market reversal downward. A decline toward the opposite levels of 157.76 and 157.38 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 at which Take Profit can be set or profits can be fixed manually, 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 at which Take Profit can be set or profits can be fixed manually, 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 Forex traders need to be very cautious when making market entry decisions. Before the release of important fundamental reports, it is best to stay out of the market to avoid being caught in sharp price fluctuations. If you decide to trade during news releases, always place stop orders to minimize losses. Without stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

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