Analysis of Trades and Trading Tips for the Japanese Yen

The test of the 156.33 price level occurred when the MACD indicator was just beginning to move downward from the zero mark, confirming a valid market entry point for selling the dollar. As a result, the pair fell to the target level of 155.83. Before this, there was another test of 156.33; however, at that time, the MACD indicator had already significantly dropped below the zero mark.

During the Asian session, the yen strengthened notably against the dollar after the Bank of Japan raised its key interest rate to the highest level in 17 years and adopted a more optimistic outlook on inflation. This development boosted expectations for further rate hikes and supported the yen. Governor Ueda and other board members increased the rate by a quarter percentage point to 0.5%, but this move had already been mostly priced into market expectations. Traders are now looking for new signals regarding the central bank's next steps.

The BOJ highlighted the stability of currencies and stock indices, indicating optimism for sustainable global economic growth. However, financial market participants are remaining cautiously optimistic as they closely monitor potential economic initiatives from the new U.S. administration. This sets the stage for short-term strength in the yen.

For my intraday strategy, I will focus mainly on implementing Scenarios #1 and #2 outlined below.

Buy Signal

Scenario #1: I plan to buy USD/JPY today at 155.63 (green line on the chart) with a target of 156.44 (thicker green line on the chart). At 156.44, I plan to exit purchases and open short positions, expecting a 30-35 pip retracement from the level. It's best to return to buying the pair during corrections or significant dips in USD/JPY. Important: Before buying, ensure that the MACD indicator is above the zero mark and just beginning to rise.

Scenario #2: I also plan to buy USD/JPY today if the price tests the 155.07 level twice consecutively, with the MACD indicator in the oversold zone. This will limit the pair's downside potential and lead to an upward market reversal. Growth toward the 155.63 and 156.44 levels can be anticipated.

Sell Signal

Scenario #1: I plan to sell USD/JPY today only after a breakout below the 155.07 level (red line on the chart), which could lead to a rapid decline in the pair. The primary target for sellers will be 154.36, where I plan to exit sales and immediately open long positions, expecting a 20-25 pip rebound from the level. Pressure on the pair can return at any moment. Important: Before selling, ensure that the MACD indicator is below the zero mark and beginning to decline.

Scenario #2: I also plan to sell USD/JPY today if the price tests the 155.63 level twice consecutively, with the MACD indicator in the overbought zone. This will limit the pair's upside potential and lead to a market reversal downward. Declines toward the 155.07 and 154.36 levels can be expected.

Chart Notes

• Thin green line: Entry price for buying the trading instrument.
• Thick green line: A suggested target for Take Profit or manually locking in profits, as further growth above this level is unlikely.
• Thin red line: Entry price for selling the trading instrument.
• Thick red line: A suggested target for Take Profit or manually locking in profits, as further decline below this level is unlikely.
• MACD Indicator: Critical for identifying overbought and oversold zones to guide market entry decisions.

Important Note for Beginner Traders

• Always approach market entry decisions cautiously.
• Avoid trading during major news releases to sidestep volatile price swings.
• If trading during news releases, always set stop-loss orders to minimize losses.
• Trading without stop-loss orders or money management practices can quickly deplete your deposit, especially when using large volumes.
• A clear trading plan, like the one outlined above, is essential for successful trading. Spontaneous trading decisions based on current market conditions are inherently disadvantageous for intraday traders.