Analysis of Trades and Advice for Trading the Japanese Yen

The test of the 157.39 level in the first half of the day occurred when the MACD indicator had significantly moved above the zero mark, limiting the pair's upward potential—particularly near USD/JPY's daily high. For this reason, I decided not to buy the dollar.

During the US session, important statistics are expected, including the ISM Manufacturing Index and a speech by FOMC member Thomas Barkin. However, it's worth noting that traders' reactions before the new year were unusual: positive US statistics led to a decline in the pair, while weak data strengthened the dollar. This anomaly suggests caution, focusing more on levels and circumstances than blindly relying on the data. Barkin's hawkish tone may support USD/JPY's growth, as the divergence in monetary policies between the US and Japan becomes increasingly apparent. Japan continues to adhere to its dovish monetary policy, highlighting stark differences between the two countries' strategies. The Fed's measures to curb inflation could enhance the dollar's appeal as a safe-haven asset, especially if Barkin reiterates this stance.

For intraday strategy, I will focus on Scenario #1 and #2.

Buy Signal

Scenario #1:I plan to buy USD/JPY today upon reaching the 157.44 level (green line on the chart) with a target of 157.94 (thicker green line on the chart). At 157.94, I will exit purchases and open sell positions in the opposite direction, expecting a pullback of 30-35 points. A rise in the pair may follow a hawkish Fed stance.Important: Before buying, ensure that the MACD indicator is above the zero mark and is just starting to rise from it.

Scenario #2:I also plan to buy USD/JPY if there are two consecutive tests of the 157.18 level, with the MACD indicator in the oversold area. This would limit the pair's downward potential and lead to a market reversal upward. Growth to the opposite levels of 157.44 and 157.94 can be expected.

Sell Signal

Scenario #1:I plan to sell USD/JPY after breaking below the 157.18 level (red line on the chart), leading to a quick decline in the pair. The key target for sellers will be 156.77, where I will exit sales and open buy positions in the opposite direction, expecting a 20-25 point pullback. Renewed pressure today may follow a dovish tone from Barkin.Important: Before selling, ensure that the MACD indicator is below the zero mark and is just starting to decline from it.

Scenario #2:I also plan to sell USD/JPY if there are two consecutive tests of the 157.44 level, with the MACD indicator in the overbought area. This would limit the pair's upward potential and lead to a market reversal downward. Declines to the opposite levels of 157.18 and 156.77 can be expected.

Chart Notes:

• Thin Green Line: Entry price for buying the instrument.
• Thick Green Line: Target price for Take Profit or manual profit-taking, as further growth above this level is unlikely.
• Thin Red Line: Entry price for selling the instrument.
• Thick Red Line: Target price for Take Profit or manual profit-taking, as further declines below this level are unlikely.
• MACD Indicator: Focus on overbought and oversold zones when entering the market.

Important Tips for Beginner Traders:

• Approach market entry decisions cautiously, especially before significant fundamental reports.
• Avoid trading during sharp price swings caused by news releases unless stop-loss orders are in place to minimize losses.
• Without proper money management and trading large volumes, you risk losing your entire deposit.
• Successful trading requires a clear plan, such as the one outlined above. Avoid spontaneous decisions based on current market conditions, as this is a losing strategy for intraday traders.