Trade review and tips for trading the Japanese yen

The test of the price at 155.98 coincided with the moment when the MACD indicator was just beginning to move up from the zero mark, confirming the correct entry point for buying the dollar. As a result, the pair rose by more than 40 pips.

Yesterday's encouraging readings on U.S. house price growth and the Chicago PMI provided substantial support to the U.S. dollar. Even the dovish tone of the December FOMC minutes did not dent market confidence in the U.S. economy's stability. The currency market reacted immediately, with the U.S. dollar strengthening against the Japanese yen. Investors revised their forecasts, believing that strong economic data could prompt the Federal Reserve to act more cautiously and keep rates unchanged in the near term. However, it should be borne in mind that the impact of such macro data on currency markets may be temporary. Long-term trends are shaped by more important reports such as inflation and labor market data. Therefore, despite the positive reaction to yesterday's figures, it is necessary to continue closely monitoring current events and the Bank of Japan's behavior and future statements.

For the intraday strategy, I will primarily rely on implementing Scenarios #1 and #2.

Buy scenarios

Scenario #1: I plan to buy USD/JPY today when the entry point around 156.66 (green line on the chart) is reached, targeting a rise to 156.89 (thicker green line on the chart). Around 156.89, I will exit longs and open shorts in the opposite direction (aiming for a 30–35-pip move back from that level). It is best to return to buying the pair on corrections and significant pullbacks. Important! Before buying, ensure the MACD indicator is above zero and has just begun to rise.

Scenario #2: I also plan to buy USD/JPY today if there are two consecutive tests of 156.50 while the MACD is in the oversold area. This will limit the pair's downside potential and trigger a reversal up. Expect a rise toward 156.66 and 156.89.

Sell scenarios

Scenario #1: I plan to sell USD/JPY today only after the 156.50 level is broken (red line on the chart), which should trigger a rapid decline in the pair. The key target for sellers will be 156.25, where I will exit shorts and immediately open longs in the opposite direction (aiming for a 20–25-pip reversal from that level). It is better to sell as high as possible. Important! Before selling, ensure the MACD indicator is below zero and has just begun to decline.

Scenario #2: I also plan to sell USD/JPY today if there are two consecutive tests of 156.66 while the MACD is in the overbought area. This will limit the pair's upside potential and produce a reversal down. Expect declines to 156.50 and 156.25.

What is on the chart:

• Thin green line – entry price at which you can buy the instrument;
• Thick green line – approximate price where you can set Take Profit or lock in profits, since further rise above this level is unlikely;
• Thin red line – entry price at which you can sell the instrument;
• Thick red line – approximate price where you can set Take Profit or lock in profits, since further decline below this level is unlikely;
• MACD indicator – when entering the market, it is important to be guided by overbought and oversold zones.

Important

Beginner forex traders must be very cautious when making entry decisions. It is best to stay out of the market before the release of important fundamental reports 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 very quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

Remember that for successful trading, you need a clear trading plan like the one presented above. Spontaneous trading decisions based on the current market situation are an inherently losing strategy for an intraday trader.