Trade Analysis and Recommendations for the Japanese Yen

A test of 149.46 occurred when the MACD indicator had already moved significantly below the zero mark, limiting the pair's downward potential. For this reason, I refrained from selling the dollar. A second test of 149.46, while MACD was in oversold territory, confirmed Scenario #2 for buying, but the expected upward movement never materialized.

Several key data releases are ahead. The ADP employment report is traditionally considered a leading indicator for the official U.S. labor market report from the Department of Labor. Deviation from forecasted figures can significantly shift market expectations. If today's data falls short of estimates, reinforcing expectations of a slowdown in job growth, pressure on the USD/JPY pair will likely intensify.

The ISM Services PMI reflects the state of the U.S. economy, as the service sector is a dominant contributor to GDP. A reading above 50 points indicates sector expansion. If the data points to a significant slowdown, the dollar's position may weaken, as the case for rate cuts by the Federal Reserve becomes stronger. Additionally, the Composite PMI, which combines both manufacturing and services data, provides an overall picture of business activity. Its trajectory helps gauge the pace of economic expansion or contraction, influencing investment decisions and corporate earnings forecasts.

For today's intraday trading strategy, I will focus on implementing Scenario #1 and Scenario #2.

Buy Signal

Scenario #1:

Buying USD/JPY is advisable if the price reaches 149.58, targeting an upward move toward 150.29. At this level, I plan to exit long positions and initiate short trades in the opposite direction, expecting a 30-35 point correction. A bullish continuation is likely as part of a corrective rebound. Important: Before entering long positions, confirm that the MACD indicator is above the zero mark and beginning its upward movement.

Scenario #2:

Another buying opportunity will arise if the price tests 149.19 twice, while the MACD indicator is in oversold territory. This would limit the pair's downward potential and trigger a bullish reversal. The anticipated targets for this scenario are 149.58 and 150.29.

Sell Signal

Scenario #1:

Selling USD/JPY is an option once the price drops below 149.19, with a downward target of 148.50, where I plan to exit short positions and buy the pair again for a 20-25 point retracement. Bearish pressure could intensify at any moment. Important: Before selling, confirm that the MACD indicator is below the zero mark and beginning to decline.

Scenario #2:

Another selling opportunity will emerge if the price tests 149.58 twice, while the MACD indicator is in overbought territory. This would limit the pair's upward potential and trigger a bearish reversal, with a downward move expected toward 149.19 and 148.50.

What's on the chart:

• Thin green line – Entry price for long positions.
• Thick green line – Suggested Take Profit level or an area where profit-taking is advisable, as further growth beyond this level is unlikely.
• Thin red line – Entry price for short positions.
• Thick red line – Suggested Take Profit level or an area where profit-taking is advisable, as further decline beyond this level is unlikely.
• MACD Indicator – Essential for determining overbought and oversold zones before entering the market.

Important Trading Considerations

For beginner traders in the Forex market, making careful entry decisions is crucial. It is advisable to stay out of the market before major economic reports to avoid sharp price swings. If you choose to trade during high-impact news releases, always use stop-loss orders to minimize potential losses. Failing to set stop-losses can result in rapid account depletion, especially when trading large volumes without proper risk management.

Lastly, a well-defined trading plan is essential for successful trading, as demonstrated in the strategy outlined above. Making impulsive trading decisions based on real-time market fluctuations is a losing approach for intraday traders.