Trade review and tips for trading the Japanese yen

The price test at 157.82 occurred as the MACD indicator began moving up from the zero line, confirming a valid entry point to buy the dollar. As a result, the pair rose about 15 pips.

The yen ceded ground to the dollar yesterday, and U.S. data played the main role. The Conference Board consumer-confidence index for October jumped to 91.7 versus a forecast of 80.5 and 84.2 in September, and the current-situation sub-index rose to 120.4. Durable-goods orders increased 1.8% versus a 0.6% forecast, and new-home sales were 676k versus a 649k forecast. That mix indicates the U.S. economy is holding up and supports expectations for higher rates and stronger Treasury yields.

This is a serious test for the yen. Recent Japanese data were solid: the Bank of Japan's core CPI for September was 2.4% versus a 1.9% forecast, and core CPI excluding fresh food was 2.1% on Friday. Yet the BOJ remains cautious. The market prices in roughly a 25% chance of a rate hike at the October 30 meeting, and until Governor Ueda gives clearer signals, USD/JPY will be driven mainly by U.S. data.

Today the key event is the Federal Reserve decision. The Fed is expected to keep rates at 4.00%, and attention will focus on the statement and Kevin Warsh's press conference. As long as U.S. data remain strong and the Fed does not deliver dovish signals, the yen will struggle to regain losses against the dollar, and any rebounds are likely to be short-lived.

For intraday strategy, I will mainly rely on Scenarios No. 1 and No. 2.

Scenarios for Buying

Scenario No. 1: I plan to buy USD/JPY today at an entry around 158.01 (the green line on the chart), targeting 158.38 (the thicker green line on the chart). Around 158.38, I intend to exit long positions and open short positions in the opposite direction (expecting a 30–35-pip move from that level). It is best to return to buying the pair on corrections and significant pullbacks. Important! Before buying, make sure the MACD indicator is above zero and just beginning to rise from it.

Scenario No. 2: I also plan to buy USD/JPY today if the price tests 157.75 twice in a row while the MACD is in the oversold area. That will limit the pair's downside potential and trigger an upward reversal. One can expect a rise to the opposite levels of 158.01 and 158.38.

Scenarios for Selling

Scenario No. 1: I plan to sell USD/JPY today only after 157.75 is refreshed (red line on the chart), which will lead to a rapid decline of the pair. Sellers' key target is 157.44, where I intend to exit shorts and immediately open buys in the opposite direction (expecting a 20–25-pip move from that level). Sellers can return at any moment — only a hint from the central bank is needed. Important! Before selling, make sure the MACD indicator is below zero and just beginning to fall from it.

Scenario No. 2: I also plan to sell USD/JPY today if the price tests 158.01 twice in a row while the MACD is in the overbought area. That will limit the pair's upside potential and trigger a downward reversal. One can expect a decline to the opposite levels of 157.75 and 157.44.

What's on the chart:

Thin green line — entry price where you can buy the instrument.

Thick green line — approximate price where you can place Take Profit or manually lock in profits, because further upside above this level is unlikely.

Thin red line — entry price where you can sell the instrument.

Thick red line — approximate price where you can place Take Profit or manually lock in profits, because further downside below this level is unlikely.

MACD indicator. When entering the market, it's important to consider overbought and oversold zones.

Important. Novice Forex traders must be very cautious when deciding to enter the market. It is best to stay out before major 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 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 above. Spontaneous trade decisions based solely on the immediate market situation are, by definition, a losing strategy for an intraday trader.