Trade Review and Tips for Trading the Japanese Yen

The price test at 158.25 occurred as the MACD indicator began moving up from the zero line, confirming a good entry point to buy the dollar. As a result, the pair rose toward the target area of 158.65.

The yen lost ground against the dollar after US inflation again exceeded forecasts. US consumer prices rose 0.4% month-on-month in October versus an expected 0.3%, and the core index added 0.3% instead of 0.2% — the third month in a row that core inflation has outpaced expectations. In September, the headline printed 0.6%, so the pace slowed, but that was not enough for the market. Federal Reserve officials' comments amplified the effect. After the release, Logan said at least two 25-bp hikes are needed, and the pace could increase. Goolsbee called the report worrying, noting services prices are rising most persistently. Against this backdrop, the probability of a December Fed hike rose to 96.3% from 78.8% on November 9.

Today's Japanese data did not help the yen. Money supply in October grew 1.7% versus a forecast of 2.1% and 1.9% the previous month, and machinery orders slowed to 42.5% from 60.4%. Yesterday household spending fell 6.8% in September versus an expected -3.1%. Recall the Bank of Japan keeps the policy rate at 1.25%; on October 30 the pause was adopted by an 8–1 vote, and over 80% of economists expect a hike in December. Wage growth — up 4.6% year-on-year in September — supports such expectations. In my view, while Fed officials speak hawkishly and Japanese data weaken, the yen will remain under pressure, and only a clear signal from the Bank of Japan about December can restore its strength.

For intraday strategy, I will mainly rely on the implementation of scenarios No. 1 and No. 2.

Scenarios to Buy

Scenario No. 1: I plan to buy the pound today when the entry point around 1.3345 (green line on the chart) is reached, targeting a move to 1.3368 (thicker green line on the chart). Around 1.3368, I will exit long positions and open short positions in the opposite direction (expecting a 30–35 pip move away from the level). Expect today's pound rise only as a corrective move. Important! Before buying, make sure the MACD indicator is above the zero line and is just beginning to rise from it.

Scenario No. 2: I also plan to buy the pound today in the event of two consecutive tests of 1.3324 while the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward reversal. You can expect a rise to the opposite levels of 1.3345 and 1.3368.

Scenarios to Sell

Scenario No. 1: I plan to sell the pound today after the 1.3324 level is broken (red line on the chart), which will lead to a rapid decline of the pair. The key target for sellers is 1.3298, where I will exit shorts and immediately open longs in the opposite direction (expecting a 20–25 pip move away from the level). Bad news will restore pressure on the pound. Important! Before selling, make sure the MACD indicator is below the zero line and is just beginning to fall from it.

Scenario No. 2: I also plan to sell the pound today in the event of two consecutive tests of 1.3345 while the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a downward reversal. You can expect a decline to the opposite levels of 1.3324 and 1.3298.

What's on the Chart:

Thin green line – the entry price at which you can buy the trading instrument;

Thick green line – the suggested price where you can place a Take Profit or manually lock in gains, since further upside above this level is unlikely;

Thin red line – the entry price at which you can sell the trading instrument;

Thick red line – the suggested price where you can place a Take Profit or manually lock in gains, since further downside below this level is unlikely;

MACD indicator. When entering the market, it is important to follow the overbought and oversold zones.

Important. Beginner Forex traders must be very cautious when making entry decisions. Before the release of important fundamental reports, it is best to stay out of the market to avoid getting caught in sharp price swings. If you decide to trade during news releases, always place stop orders to minimize losses. Without stop orders, you can quickly lose your entire deposit, especially if you don't use money management and trade large volumes.

Remember, successful trading requires a clear trading plan, like the example I presented above. Spontaneous trading decisions based on the current market situation are a losing strategy for an intraday trader from the start.