Trade breakdown and trading advice for the Japanese yen

A price test at 160.78 occurred at a time when the MACD indicator had already moved significantly above the zero line, which limited the upward potential of the pair. For this reason, I did not buy the dollar.

In addition to the expected intervention by the Bank of Japan through currency operations — especially considering that the yen has already weakened to 161 per dollar — today's U.S. economic data releases are expected, including weekly Initial Jobless Claims and the Philadelphia Fed Manufacturing Index. Positive trends in these indicators may strengthen confidence in the sustained growth of the U.S. economy, supporting expectations of tighter Federal Reserve monetary policy, which could lead to further gains in USD/JPY. However, as mentioned earlier, caution is advised when buying at these levels. The last time, such conditions led to a sharp drop within just a few hours toward 155 yen per dollar.

In any case, traders seeking higher yields and stability will continue reallocating funds into the U.S. dollar, which may further weaken the Japanese yen.

As for the intraday strategy, I will mainly rely on scenarios #1 and #2.

Buy Signal

Scenario #1: I plan to buy USD/JPY today if the entry point at 161.05 (green line on the chart) is reached, with a target at 161.57 (thicker green line on the chart). At 161.57, I will exit long positions and open short positions in the opposite direction (expecting a 30–35 point move back). Further upside is likely only in the case of strong U.S. data. Important! Before buying, ensure that the MACD indicator is above the zero line and has just started rising from it.

Scenario #2: I also plan to buy USD/JPY if there are two consecutive tests of 160.78 while the MACD is in oversold territory. This would limit downward potential and trigger a reversal to the upside. A move toward 161.05 and 161.57 can be expected.

Sell Signal

Scenario #1: I plan to sell USD/JPY after a break below 160.78 (red line on the chart), which would lead to a rapid decline in the pair. The key target for sellers is 160.30, where I will exit short positions and immediately open long positions in the opposite direction (expecting a 20–25 point rebound). Selling pressure may return in the event of central bank intervention. Important! Before selling, ensure that the MACD indicator is below the zero line and has just started moving downward.

Scenario #2: I also plan to sell USD/JPY if there are two consecutive tests of 161.05 while the MACD is in overbought territory. This would limit upward potential and trigger a downward reversal. A decline toward 160.78 and 160.30 can be expected.

What is shown on the chart:

• Thin green line – entry price for buying the instrument;
• Thick green line – projected take-profit level or manual profit-taking zone, as further upside above this level is unlikely;
• Thin red line – entry price for selling the instrument;
• Thick red line – projected take-profit level or manual profit-taking zone, as further downside below this level is unlikely;
• MACD indicator – trading decisions should be guided by overbought and oversold zones.

Important: Beginner Forex traders must be extremely cautious when entering the market. Before major fundamental releases, it is best to stay out of the market to avoid sharp price volatility. If you choose to trade during news releases, always place stop-loss orders to minimize losses. Without stop-losses, you may quickly lose your entire deposit, especially if proper risk management is not used and large position sizes are traded.

And remember: successful trading requires a clear trading plan, similar to the one presented above. Spontaneous decision-making based on current market conditions is an inherently losing intraday trading strategy.