Trade Breakdown and Tips for Trading the Japanese Yen

The test of the 155.28 price level occurred at a moment when the MACD indicator was just beginning to move upward from the zero line, which confirmed a correct entry point for buying the dollar. However, losses were recorded on the trade, as the dollar failed to rise.

Given the current macroeconomic environment, investors and traders will continue to closely monitor every economic indicator that can shed light on the state of the U.S. economy. The Empire Manufacturing Index, which reflects manufacturing activity in New York State, is one such indicator. A drop in this index below the expected level may indicate a slowdown in growth in the manufacturing sector, which usually has a negative impact on the U.S. currency. The NAHB Housing Market Index is another important indicator that reflects builders' sentiment and, consequently, the overall condition of the real estate market. A decline in this index may point to weakening demand for new homes, which, in turn, may put pressure on economic growth. A speech by John Williams, a member of the Federal Open Market Committee, adds an additional level of significance to today's economic events. His comments on the current economic situation and the outlook for monetary policy may have a significant impact on market sentiment.

Weak data from the Empire Manufacturing Index and the NAHB index, combined with dovish rhetoric from Williams, could indeed trigger a new wave of dollar declines against the Japanese yen.

As for the intraday strategy, I will rely more on the implementation of scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: Today, I plan to buy USD/JPY upon reaching the entry point around 155.25 (green line on the chart), with a target rise to the 155.66 level (thicker green line on the chart). Around 155.66, I will exit long positions and open short positions in the opposite direction (targeting a move of 30–35 points in the opposite direction from the level). A rise in the pair can be expected only after a hawkish stance from the Fed. Important! Before buying, make sure that the MACD indicator is above the zero line and is just beginning to rise from it.

Scenario No. 2: I also plan to buy USD/JPY today in the case of two consecutive tests of the 155.01 price level at a moment when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a reverse upward market reversal. A rise toward the opposite levels of 155.25 and 155.66 can be expected.

Sell Signal

Scenario No. 1: I plan to sell USD/JPY today after the 155.01 level is updated (red line on the chart), which will lead to a rapid decline in the pair. The key target for sellers will be the 154.62 level, where I will exit short positions and also immediately open long positions in the opposite direction (targeting a move of 20–25 points in the opposite direction from the level). Pressure on the pair will return only in the case of dovish rhetoric. Important! Before selling, make sure that the MACD indicator is below the zero line and is just beginning to decline from it.

Scenario No. 2: I also plan to sell USD/JPY today in the case of two consecutive tests of the 155.25 price level at a moment when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a reverse downward market reversal. A decline toward the opposite levels of 155.01 and 154.62 can be expected.

What's on the Chart:

• Thin green line – the entry price at which the trading instrument can be bought;
• Thick green line – the expected price where Take Profit orders can be placed or profits can be fixed 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 expected price where Take Profit orders can be placed or profits can be fixed manually, as further decline below this level is unlikely;
• MACD indicator. When entering the market, it is important to rely on overbought and oversold zones.

Important. Beginner Forex traders need to 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 sharp price fluctuations. If you decide to trade during news releases, always place stop-loss orders to minimize losses. Without stop-loss orders, you can lose your entire deposit very quickly, especially if you do not use money management and trade large volumes.

And remember that successful trading requires a clear trading plan, such as the one presented above. Spontaneous trading decisions based on the current market situation are an inherently losing strategy for an intraday trader.