Trade Analysis and Advice for Trading the Japanese Yen
The test of the 153.50 price level occurred when the MACD indicator was just beginning to move upward from the zero mark. This confirmed the validity of the entry point for buying the dollar, resulting in a nearly 30-point rise in the pair.
Today's anticipated interest rate cut by the US Federal Reserve is widely expected. However, if Powell hints at a pause in the easing cycle for next year, the dollar will likely strengthen against the yen. At the same time, markets are also pricing in the long-awaited potential for interest rate hikes in Japan, which continues to attract investor interest in riskier assets. Therefore, a dovish tone from the Fed chairman could trigger a significant sell-off in USD/JPY. For intraday strategies, I will focus on implementing Scenarios #1 and #2.
Buy Signal
Scenario #1: Today, I plan to buy USD/JPY at the 153.79 level (green line on the chart), targeting growth to the 154.29 level (thicker green line on the chart). At 154.29, I plan to exit purchases and open sales in the opposite direction (expecting a 30-35 point pullback from that level). The pair's continued upward trend supports the expectation of further growth. Important: Before buying, ensure that the MACD indicator is above the zero mark and just beginning to rise from it.
Scenario #2: I also plan to buy USD/JPY in the event of two consecutive tests of the 153.53 level, while the MACD indicator is in the oversold zone. This will limit the pair's downward potential and trigger a market reversal upward. Growth toward the opposite levels of 153.79 and 154.29 can be anticipated.
Sell Signal
Scenario #1: I plan to sell USD/JPY after breaking through the 153.53 level (red line on the chart), which will likely trigger a sharp decline in the pair. The primary target for sellers will be 153.01, where I plan to exit sales and immediately open purchases in the opposite direction (expecting a 20-25 point pullback from that level). Selling pressure on the dollar will likely return only after weak US data. Important: Before selling, ensure that the MACD indicator is below the zero mark and just beginning to decline from it.
Scenario #2: I also plan to sell USD/JPY in the event of two consecutive tests of the 153.79 level, while the MACD indicator is in the overbought zone. This will limit the pair's upward potential and trigger a market reversal downward. A decline toward the opposite levels of 153.53 and 153.01 can be anticipated.
Key Chart Levels
- Thin Green Line: Entry price for buying the instrument.
- Thick Green Line: Approximate price for setting Take Profit or manually closing positions, as further growth above this level is unlikely.
- Thin Red Line: Entry price for selling the instrument.
- Thick Red Line: Approximate price for setting Take Profit or manually closing positions, as further declines below this level are unlikely.
- MACD Indicator: When entering the market, it is essential to monitor overbought and oversold zones.
Important Notes
Beginner forex traders should exercise caution when deciding on market entries. It is best to stay out of the market before the release of important fundamental reports to avoid being caught in sharp price fluctuations. If you choose to trade during news releases, always set stop-loss orders to minimize losses. Without stop-loss orders, you risk quickly losing your entire deposit, especially when trading large volumes without proper money management.
Remember, successful trading requires a clear trading plan, such as the one outlined above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.
The material has been provided by InstaForex Company - www.instaforex.com
