Trade Review and Trading Tips for the Japanese Yen

The test of the 160.01 price level in the first half of the day occurred when the MACD indicator had just started moving upward from the zero line, confirming a valid entry point for buying the dollar. As a result, the pair rose by 12 points, and that was the extent of the move.

The yen remains under pressure from the dollar, and today it faces another test. The US Producer Price Index (PPI) will be released in the second half of the day and is expected to slow from 1.3% to 0.4% m/m. This will be followed by speeches from Collins, Bowman, and Daly. Collins previously described interest rates as moderately restrictive, while Daly had earlier considered monetary policy to be in a good position but acknowledged yesterday that further tightening was necessary. Markets are already pricing in 25-basis-point rate hikes in December, January, and March.

With the Bank of Japan's interest rate at 1.25%, the central bank is also approaching another policy move. The swap market estimates the probability of a rate hike in December at approximately 87%, which partly limits the pair's upside above 160.00. Speeches by FOMC members will be the decisive factor. Susan Collins previously described interest rates as moderately restrictive, Michelle Bowman is scheduled to speak next, and Mary Daly stated yesterday that further tightening was necessary, although she had previously assessed monetary policy as being in a good position. If the hawkish tone persists, even a soft PPI reading will quickly be overshadowed.

As for the intraday strategy, the focus will be primarily on implementing Scenarios #1 and #2.

Buy Signal

Scenario #1: Buying USD/JPY is planned today when the price reaches the entry point around 160.01 (the thin green line on the chart), with a target of a rise to 160.39 (the thicker green line on the chart). Around 160.39, long positions will be closed, and short positions will be opened in the opposite direction (targeting a move of 30–35 points in the opposite direction from this level). A rise in the pair today can only be expected following strong US economic data. Important! Before buying, make sure that the MACD indicator is above the zero line and has just started rising from it.

Scenario #2: USD/JPY can also be bought today if the price tests the 159.84 level twice consecutively while the MACD indicator is in the oversold zone. This will limit the pair's downward potential and trigger an upward market reversal. A rise toward the opposite levels of 160.01 and 160.39 can be expected.

Sell Signal

Scenario #1: Selling USD/JPY is planned today after the 159.84 level is breached (the thin red line on the chart), which should lead to a rapid decline in the pair. The sellers' key target will be 159.45, where short positions will be closed and long positions opened immediately in the opposite direction (targeting a move of 20–25 points in the opposite direction from this level). Selling pressure on the pair could return today if the central bank intervenes. Important! Before selling, make sure that the MACD indicator is below the zero line and has just started falling from it.

Scenario #2: USD/JPY can also be sold today if the price tests the 160.01 level twice consecutively while the MACD indicator is in the overbought zone. This will limit the pair's upward potential and trigger a downward market reversal. A decline toward the opposite levels of 159.84 and 159.45 can be expected.

What the Chart Shows

• Thin green line – the entry price at which the trading instrument can be bought;
• Thick green line – the estimated price level at which Take Profit orders can be placed or profits can be closed manually, as further gains above this level are unlikely;
• Thin red line – the entry price at which the trading instrument can be sold;
• Thick red line – the estimated price level at which Take Profit orders can be placed or profits can be closed manually, as further declines below this level are unlikely;
• MACD indicator. When entering the market, it is important to take overbought and oversold conditions into account.

Important. Beginner Forex traders should exercise extreme caution when making market entry decisions. Before the release of major fundamental reports, it is best to stay out of the market to avoid exposure to sharp price fluctuations. If trading during news releases, always place stop-loss orders to minimize losses. Without stop-loss orders, the entire trading account can be lost very quickly, especially when large position sizes are used without proper money management.

Remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on current market conditions is a losing strategy for intraday traders from the outset.