Analysis of Trades and Trading Tips for the Japanese Yen

The test of 157.94 in the first half of the day occurred when the MACD indicator was just beginning to move upward from the zero line, confirming a buy signal for the dollar. However, the pair failed to rise.

The yen is focused on two key factors today: US economic data and tomorrow's Bank of Japan decision. In the second half of the day, the first estimate of US GDP for the third quarter will be released, with a growth forecast at 3.2%, up from 2.2%. Also due are the core Personal Consumption Expenditures (PCE) price index, personal income and spending data, and weekly initial jobless claims. If economic growth exceeds estimates and the PCE index comes in above all economists' forecasts, the dollar will most likely continue to strengthen. For USD/JPY, a strong US report would primarily support Treasury yields, which moved lower yesterday following comments by Kevin Warsh.

The situation in Japan is more subdued. The consumer confidence indicator for October, released this morning, came in at 35.0, compared with a forecast of 35.1 and a previous reading of 35.4, slightly below expectations. The interest rate decision will be announced on Friday. The rate currently stands at 1.25%, following the increase on September 18, and the market puts the probability of another hike at approximately 25%. Most market participants expect the central bank to leave the rate unchanged. Such an outcome would suggest that underlying inflation has finally reached the 2% target. The key question at the meeting is whether the Bank of Japan will state for the first time since the target was established that underlying inflation has broadly reached that level. This outcome appears highly likely. Such an acknowledgment would help clarify how much further rates need to rise before accommodative monetary policy ceases to have an effect.

As for the intraday strategy, the main focus will be on the implementation of Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: Buy USD/JPY today if the entry point around 158.02 is reached (the thin green line on the chart), targeting a rise to 158.30 (the thicker green line on the chart). Around 158.30, close long positions and open short positions in the opposite direction, targeting a move of 30–35 points in the opposite direction from that level. The pair can be expected to rise today only if US economic data are strong. Important! Before buying, make sure the MACD indicator is above the zero line and is just beginning to rise from it.

Scenario No. 2: Buy USD/JPY today if the price tests 157.84 twice consecutively while the MACD indicator is in oversold territory. This would limit the pair's downward potential and trigger an upward market reversal. The pair could then rise toward the opposite levels of 158.02 and 158.30.

Sell Signal

Scenario No. 1: Sell USD/JPY today after the price breaks below 157.84 (the thin red line on the chart), which could lead to a rapid decline in the pair. The key target for sellers will be 157.49, where short positions should be closed and long positions opened in the opposite direction, targeting a move of 20–25 points in the opposite direction from that level. Downward pressure on the pair could return today if the central bank intervenes. Important! Before selling, make sure the MACD indicator is below the zero line and is just beginning to decline from it.

Scenario No. 2: Sell USD/JPY today if the price tests 158.02 twice consecutively while the MACD indicator is in overbought territory. This would limit the pair's upward potential and trigger a downward market reversal. The pair could then decline toward the opposite levels of 157.84 and 157.49.

What the Chart Shows

• Thin green line – the entry price at which the trading instrument can be bought.
• Thick green line – the projected price level at which Take Profit orders can be placed or profits can be closed manually, as further gains above this level are unlikely.
• Thin red line – the entry price at which the trading instrument can be sold.
• Thick red line – the projected price level at which Take Profit orders can be placed or profits can be closed manually, as further declines below this level are unlikely.
• MACD indicator. When entering the market, it is important to take overbought and oversold zones into account.

Important. Beginner Forex traders should exercise great caution when deciding to enter the market. It is generally best to stay out of the market ahead of major fundamental data releases to avoid exposure to sharp exchange-rate fluctuations. If trading during news releases, always use stop-loss orders to minimize losses. Without stop-loss orders, the entire trading account can be lost very quickly, especially when risk management rules are ignored and large position sizes are used.

Remember that successful trading requires a clear trading plan, such as the one outlined above. Making spontaneous trading decisions based on current market conditions is a losing strategy for an intraday trader from the outset.