Analysis of Trades and Trading Tips for the Japanese Yen

The test of the 148.53 price level occurred when the MACD indicator had already dropped significantly below the zero mark, which limited the pair's downside potential. A short time later, another test of 148.52 took place while the MACD was in oversold territory, which triggered Buy Scenario #2 for the dollar. As a result, the pair rose by 25 pips.

Strong U.S. data and comments from Federal Reserve officials supported the dollar in the second half of yesterday's session, putting pressure on the yen. Resilient retail sales figures and signs of the Fed's readiness to continue fighting inflation created favorable conditions for the strengthening of the U.S. currency. The Japanese yen, in turn, came under pressure due to its sensitivity to interest rates. The interest rate differential between the U.S. and Japan makes the yen less attractive to investors.

Today, Japan's Consumer Price Index (CPI) was released, showing a 3.3% increase, entirely in line with economists' forecasts. Although this result met expectations, it still signals ongoing inflationary pressure in Japan's economy. A country that long struggled with deflation is now facing the need to adapt to new economic realities. While a forecast-matching result may not typically have a significant impact on the market, in the context of broader economic conditions, even expected figures can be interpreted in various ways. Given the persistence of inflation, the Bank of Japan may need to reconsider its cautious stance on monetary policy, which could have a major impact on the yen's exchange rate. In the short term, the market will likely focus on the CPI's breakdown to assess which components are driving inflation most. Key areas to watch include energy prices, food, and services.

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

Buy Scenario

Scenario #1: I plan to buy USD/JPY today upon reaching the entry point around 148.90 (green line on the chart), targeting a rise toward 149.44 (thicker green line on the chart). Around 149.44, I plan to exit long positions and open short positions in the opposite direction, aiming for a 30–35 pip pullback. It's best to buy the pair during corrections and significant drawdowns in USD/JPY.

Important! Before buying, ensure that the MACD indicator is above the zero line and just starting to rise from it.

Scenario #2: I also plan to buy USD/JPY today if the price tests 148.61 twice in a row while the MACD indicator is in oversold territory. This will limit the pair's downside potential and trigger a reversal upward. A rise toward the opposite levels of 148.90 and 149.44 can be expected.

Sell Scenario

Scenario #1: I plan to sell USD/JPY today only after a break below 148.61 (red line on the chart), which could trigger a sharp drop in the pair. The key target for sellers will be 148.06, where I intend to exit short positions and immediately open long positions in the opposite direction, aiming for a 20–25 pip rebound. Strong downward pressure on the pair is unlikely today.

Important! Before selling, ensure that the MACD indicator is below the zero line and just starting to decline from it.

Scenario #2: I also plan to sell USD/JPY today if the price tests 148.90 twice in a row while the MACD indicator is in overbought territory. This will limit the pair's upside potential and lead to a downward reversal. A decline toward the opposite levels of 148.61 and 148.06 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.