The price test at 158.20 occurred as the MACD indicator began to move down from the zero mark, confirming the correct entry point to sell the dollar. As a result, the pair collapsed by more than 100 pips.
The dollar fell after the July US employment report came in significantly weaker than expected. Nonfarm payrolls decreased by 23,000 instead of the forecasted increase of 97,000. Although the unemployment rate unexpectedly fell to 4.1 percent, with 6.9 million unemployed, the market focused on weak hiring, interpreting it as a sign of economic cooling and a reason to expect softer Federal Reserve policy. For the yen, the dollar's collapse turned into appreciation, as the weakening of the US currency amid disappointing data shifted the balance of the pair in favor of the Japanese currency. The gap in expected policy between the two central banks began to narrow as the weak report reduced the chances of further Fed tightening, thereby renewing interest in the yen as a more defensive asset amid growing uncertainty around the US economy. The decline in USD/JPY also pushed the topic of currency intervention into the background. The Bank of Japan has already intervened in the past to support the yen during sharp weakening, but yen strength itself reduces the need for such intervention. While the dollar remains under pressure from weak data, the pair retains potential for further declines, and its dynamics will depend on how sustainable the reversal in Fed rate expectations proves to be.
As for the intraday strategy, I will rely mainly on scenarios No. 1 and No. 2.
Scenario No. 1: I plan to buy USD/JPY today when the entry point around 158.54 is reached (green line on the chart) with a target to rise to 159.00 (thicker green line on the chart). Around 159.00, I intend to exit long positions and open short positions in the opposite direction (expecting a 30–35 pip move in the opposite direction from that level). It is best to return to buying the pair on corrections and significant pullbacks of USD/JPY. Important! Before buying, make sure the MACD indicator is above the zero mark and only beginning to rise from it.
Scenario No. 2: I also plan to buy USD/JPY today in case of two consecutive tests of the 158.27 price while the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward reversal. One can expect a rise to the opposing levels 158.54 and 159.00.
Selling ScenariosScenario No. 1: I plan to sell USD/JPY today only after the 158.27 level is refreshed (red line on the chart), which will trigger a rapid decline in the pair. The sellers' key target will be 157.74, where I intend to exit shorts and immediately open longs in the opposite direction (expecting a 20–25 pip move in the opposite direction from that level). Sellers can return at any moment; they only need any hint from the central bank. Important! Before selling, make sure the MACD indicator is below the zero mark and only beginning to decline from it.
Scenario No. 2: I also plan to sell USD/JPY today if there are two consecutive tests of 158.54 while the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a downward reversal. One can expect a decline to the opposing levels 158.27 and 157.74.
Important: Beginner forex traders need to make entry decisions very cautiously. Before key fundamental reports are released, it is best to stay out of the market 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 practice money management and trade large volumes.
And remember, successful trading requires a clear trading plan, as outlined above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.