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26.05.2025 03:18 PM
USD/JPY: Simple Trading Tips for Beginner Traders on May 26th (U.S. Session)

Trade Review and Tips for Trading the Japanese Yen

The test of the 142.85 level occurred when the MACD indicator had already moved far above the zero line, limiting the pair's upward potential. For this reason, I did not buy the dollar. A second test of 142.85 shortly afterward triggered Scenario #2 for a short position, but no meaningful drop followed.

The positive data on Japan's Leading Economic Index quickly lost momentum, which negatively affected the yen's bullish trend against the dollar. Investors, briefly encouraged by the prospects of a stronger Japanese currency, were once again faced with the reality of Japan's macroeconomic uncertainty. The initial optimism fueled by expectations of a more aggressive monetary stance from the Bank of Japan faded amid persistent doubts about the durability of Japan's economic growth. Short-term spikes in positive data, like the released index, were not enough to support the yen's upward movement.

Today, with no major U.S. statistics scheduled during the U.S. session, the focus will shift to Trump's statements and potential speeches from FOMC members, although none are currently on the calendar. Therefore, strong volatility in USD/JPY is unlikely.

For today's intraday strategy, I will primarily rely on Scenarios #1 and #2.

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Buy Signal

Scenario #1: I plan to buy USD/JPY upon reaching the entry point at 143.03 (green line on the chart) with a target of 143.53 (thicker green line on the chart). At 143.53, I will exit long positions and open short positions in the opposite direction (anticipating a 30–35 point pullback). A strong upward movement in the pair is unlikely today.Important: Before entering a long position, make sure the MACD indicator is above the zero line and just beginning to rise.

Scenario #2: I also plan to buy USD/JPY if there are two consecutive tests of the 142.76 level while the MACD is in the oversold zone. This should limit the downward potential and lead to a reversal upward. Expect a move toward 143.03 and 143.53.

Sell Signal

Scenario #1: I plan to sell USD/JPY once the price breaks below 142.76 (red line on the chart), expecting a quick drop. The key target will be 142.31, where I'll exit shorts and possibly reverse into longs (expecting a 20–25 point bounce). However, significant downward pressure is unlikely today. Important: Before selling, ensure the MACD is below the zero line and just beginning to fall.

Scenario #2: I also plan to sell USD/JPY in case of two consecutive tests of 143.03, while MACD is in the overbought zone. This setup will likely trigger a reversal downward. Expect a move toward 142.76 and 142.31.

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Chart Key:

  • Thin green line – entry price for buying the instrument
  • Thick green line – expected price to set Take Profit or manually close positions (further growth above this level is unlikely)
  • Thin red line – entry price for selling the instrument
  • Thick red line – expected price to set Take Profit or manually close positions (further decline below this level is unlikely)
  • MACD indicator – always check overbought and oversold zones before entering trades

Important Note for Beginners:

New Forex traders should exercise caution when entering the market. It's best to stay out of the market ahead of major economic releases to avoid sharp price swings. If you decide to trade during such periods, always use stop-loss orders to minimize losses. Trading without stop-losses can quickly deplete your account, especially if you're not practicing money management and trading with large volumes.

Remember: For successful trading, it is essential to have a clear and structured trading plan, like the one outlined above. Spontaneous trading decisions based on current market fluctuations are inherently a losing strategy for intraday traders.

Jakub Novak,
Analytical expert of InstaForex
© 2007-2025
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