Trade Analysis and Trading Tips for the Japanese Yen
The test of the 156.50 price level occurred when the MACD indicator had already moved significantly above the zero line, which limited the pair's upward potential. For this reason, I did not buy the dollar and decided to wait before the important U.S. data.
Currency interventions by the Bank of Japan are currently on hold, which is not surprising, as the market is awaiting the August U.S. employment report, which has become the main event of the week. The forecast calls for an increase in employment of around 50,000–60,000, with unemployment at approximately 4.1%, but the backdrop ahead of the release is clearly negative, as the entire week of U.S. labor-market data has been disappointing. For the yen, the outcome of the report is directly relevant. It will then become clear whether the effect of the Bank of Japan's currency intervention, carried out in coordination with the United States, will become firmly established, as it has already led to a stronger yen. I believe that even a strong NFP report will struggle to break against this trend, while a weak report would only increase pressure on the dollar and give USD/JPY additional downside momentum. At the same time, it is important to keep in mind that the intervention changes the pair's underlying dynamics, as dollar buyers have to contend with the real risk of further intervention. I think that a weak employment report could accelerate the decline in USD/JPY, while data in line with forecasts, which would not rule out a September Fed rate hike, would provide the dollar with only limited support against the strengthening yen.
As for the intraday strategy, I will focus primarily on the implementation of Scenarios #1 and #2.
Buy Signal
Scenario #1: I plan to buy USD/JPY today when the entry point is reached around 156.50 (the green line on the chart), with a target of 157.16 (the thicker green line on the chart). Around 157.16, I will exit the long position and open a short position in the opposite direction, targeting a move of 30–35 points in the opposite direction from the level. A rise in the pair today is possible, but the potential is rather limited. Important! Before buying, make sure that the MACD indicator is above the zero line and has only just started rising from it.
Scenario #2: I also plan to buy USD/JPY today if the price tests 156.10 twice consecutively while the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a reversal higher. A rise toward the opposite levels of 156.50 and 157.16 can be expected.
Sell Signal
Scenario #1: I plan to sell USD/JPY today after the 156.10 level is broken (the red line on the chart), which should lead to a rapid decline in the pair. The key target for sellers will be 155.50, where I will exit the short position and immediately open a long position in the opposite direction, targeting a move of 20–25 points in the opposite direction from the level. Downward pressure on the pair will return if the central bank intervenes. Important! Before selling, make sure that the MACD indicator is below the zero line and has only just started declining from it.
Scenario #2: I also plan to sell USD/JPY today if the price tests 156.50 twice consecutively while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a reversal lower. A decline toward the opposite levels of 156.10 and 155.50 can be expected.
What the chart shows:
Thin green line – the entry price at which the trading instrument can be bought;Thick green line – the estimated price at which Take Profit orders can be placed or profits can be taken manually, as further growth above this level is unlikely;Thin red line – the entry price at which the trading instrument can be sold;Thick red line – the estimated price at which Take Profit orders can be placed or profits can be taken manually, as further decline below this level is unlikely;MACD indicator. When entering the market, it is important to consider the overbought and oversold zones.Important. Beginner Forex traders should 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 exchange-rate fluctuations. If you decide to trade during a news release, always place stop orders to minimize losses. Without stop orders, you can lose your entire deposit very quickly, especially if you do not use proper money management and instead trade large volumes.
And remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on the current market situation is a losing strategy for an intraday trader from the outset.