Trade Analysis and Tips for Trading the Japanese Yen

The price test at 161.23 occurred when the MACD indicator had moved significantly below the zero mark, limiting the pair's downward potential. The second test at 161.23 provided a reason to buy under Scenario No. 2, resulting in a small 10-pip upward movement in the pair.

The Japanese yen demonstrated a short-term surge last week, triggered by reports that Prime Minister Sanae Takaichi had signaled possible support for an interest rate hike by the Bank of Japan. Her remarks, highlighting the importance of close cooperation between the government and the central bank, were perceived by the market as a hint at readiness for monetary tightening. However, this momentum proved short-lived.

The market seems to have quickly returned to its previous sentiments, and demand for the U.S. dollar against the yen has recovered with similar strength. The current price of the USD/JPY pair, approaching the 161.75 mark, has heightened expectations of possible intervention by the BoJ. In such a situation, all market participants are focused on the BoJ. It is expected that, in an attempt to stabilize the national currency and prevent further depreciation, the central bank may resort to currency intervention. The scale and timing of such intervention will be key factors in determining the future dynamics of the USD/JPY pair and overall currency market sentiment related to the Japanese economy.

Regarding the intraday strategy, I will primarily rely on the implementation of scenarios No. 1 and No. 2.

Buy Scenarios

Scenario No. 1: I plan to buy USD/JPY today at an entry point around 161.75 (green line on the chart), targeting a move to 162.18 (thicker green line on the chart). Around 162.18, I plan to exit the long positions and open short positions in the opposite direction (targeting a movement of 30-35 pips in the opposite direction from the level). It is best to return to buying the pair on corrections and significant pullbacks in USD/JPY. Important! Before buying, ensure that the MACD indicator is above the zero mark and is just starting to rise from it.

Scenario No. 2: I also plan to buy USD/JPY today in the case of two consecutive tests of the price 161.51 while the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to an upward market reversal. One can expect growth to the opposite levels of 161.75 and 162.18.

Sell Scenarios

Scenario No. 1: I plan to sell USD/JPY today only after the 161.51 level is updated (red line on the chart), which will trigger a swift decline in the pair. The key target for sellers will be the level of 161.10, where I plan to exit the shorts and also open longs immediately in the opposite direction (targeting a movement of 20-25 pips in the opposite direction from the level). Sellers can return at any moment with just a hint from the central bank. Important! Before selling, ensure that the MACD indicator is below the zero mark and is just starting to decline from it.

Scenario No. 2: I also plan to sell USD/JPY today in the case of two consecutive tests of the price 161.75 while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward market reversal. One can expect a decline to the opposite levels of 161.51 and 161.10.

What's on the Chart:

Thin green line – entry price for buying the trading instrument;

Thick green line – presumed price level for placing Take Profit or manually securing profits, as further growth above this level is unlikely;

Thin red line – entry price for selling the trading instrument;

Thick red line – presumed price level for placing Take Profit or manually securing profits, 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 traders in the Forex market must be very cautious when making entry decisions. Before major fundamental reports are released, it is best to stay out of the market to avoid being caught in sharp fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without setting stop orders, you can quickly lose your entire deposit, especially if you are not using money management and are trading large volumes.

And remember, for successful trading, you need a clear trading plan similar to the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.