Analysis of Trades and Trading Tips for the Japanese Yen

The price test at 147.50 coincided with the moment when the MACD indicator had already moved significantly above the zero mark, which limited the pair's upside potential.

Yesterday, the Japanese yen very quickly lost all the advantage it had gained. The effect of unexpected optimism triggered by potential monetary easing in the U.S. proved short-lived for the Japanese currency. Additional pressure on the yen comes from the divergence in monetary policy between the Bank of Japan and other major central banks. While the Federal Reserve hints at possible rate cuts, the BOJ no longer signals tightening, keeping interest rates at low levels. This policy reduces the yen's attractiveness for investors seeking higher returns.

Today, data showed a sharp decline in the BOJ's Consumer Price Index to 2.0%, which negatively impacted the yen. At first glance, reaching the inflation target long pursued by the central bank should have encouraged markets. However, in this case, such a sharp drop rather indicates the fragility of economic recovery and the risk of returning to deflation. This situation puts the BOJ in a difficult position. On the one hand, achieving the inflation target could justify considering a gradual tightening of monetary policy, which has pressured the yen for many years. On the other hand, the sharp decline in CPI suggests the need to maintain stimulus measures to support economic growth.

For intraday strategy, I will focus primarily on Scenarios #1 and #2.

Buy Scenario

Scenario #1: I plan to buy USD/JPY today at the entry point around 147.91 (green line on the chart) with a target at 148.36 (thicker green line on the chart). Around 148.36, I intend to exit long positions and open shorts in the opposite direction (expecting a 30–35 point pullback). It is best to return to buying the pair on corrections and deep pullbacks of USD/JPY.

Important! Before buying, make sure the MACD indicator is above the zero line and only starting to rise from it.

Scenario #2: I also plan to buy USD/JPY today if there are two consecutive tests of 147.54 when the MACD indicator is in the oversold zone. This will limit the pair's downside potential and lead to an upward reversal. Growth toward 147.91 and 148.36 can be expected.

Sell Scenario

Scenario #1: I plan to sell USD/JPY today only after the price updates 147.54 (red line on the chart), which will lead to a quick decline in the pair. The key target for sellers will be 147.08, where I plan to exit shorts and immediately open longs in the opposite direction (expecting a 20–25 point rebound). It is better to sell from as high as possible.

Important! Before selling, make sure the MACD indicator is below the zero line and only starting to decline from it.

Scenario #2: I also plan to sell USD/JPY today if there are two consecutive tests of 147.91 when the MACD indicator is in the overbought zone. This will limit the pair's upside potential and lead to a reversal downward. A decline toward 147.54 and 147.08 can be expected.

What's on the Chart:

• The thin green line represents the entry price where the trading instrument can be bought.
• The thick green line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price growth above this level is unlikely.
• The thin red line represents the entry price where the trading instrument can be sold.
• The thick red line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price decline below this level is unlikely.
• The MACD indicator should be used to assess overbought and oversold zones when entering the market.

Important Notes:

• Beginner Forex traders should exercise extreme caution when making market entry decisions. It is advisable to stay out of the market before the release of important fundamental reports to avoid exposure to sharp price fluctuations. If you choose to trade during news releases, always use stop-loss orders to minimize potential losses. Trading without stop-loss orders can quickly wipe out your entire deposit, especially if you neglect money management principles and trade with high volumes.
• Remember, successful trading requires a well-defined trading plan, similar to the one outlined above. Making impulsive trading decisions based on the current market situation is a losing strategy for intraday traders.