31.07.202609:09 Forex Analysis & Reviews: USD/JPY: Simple Trading Tips for Beginner Traders on July 31. Review of Yesterday's Forex Trades

Trade Review and Tips for Trading the Japanese Yen

The price test at 162.65 coincided with the moment when the MACD indicator was starting to move down from the zero mark, confirming it as a valid entry point to sell the dollar. As a result, the pair declined by 100 pips.

The Japanese yen reacted with strength to the Bank of Japan's decision to keep its political stance unchanged, indicating less caution regarding economic growth and showing confidence that the economy continues on the path of further policy normalization. However, the central bank also conducted a currency intervention to strengthen the yen, which has been a topic of discussion lately, leading to the pair's decline from the level of 163 to 158. The central bank continued to highlight the risk of core inflation exceeding the 2% target and promised to continue raising borrowing costs in response to economic and price trends. This rhetoric serves as an indicator of the BoJ's readiness for further normalization steps if inflationary pressures increase, which is positive for the yen and negative for the US dollar.

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

Buying Scenarios

• Scenario #1: I plan to buy USD/JPY today when the entry point reaches around 160.87 (green line on the chart), targeting a rise to the level of 161.46 (the thicker green line on the chart). At around 161.46, I plan to exit my long positions and open short positions in the opposite direction (expecting a movement of 30-35 pips from the level). It's best to return to buying the pair on corrections and significant retracements in USD/JPY. Important! Before buying, ensure that the MACD indicator is above the zero mark and is just beginning to rise from it.
• Scenario #2: I also plan to buy USD/JPY today if there are two consecutive tests of the price at 160.57 when the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward market reversal. A rise to the opposite levels of 160.87 and 161.46 can be expected.

Selling Scenarios

• Scenario #1: I plan to sell USD/JPY today only after the level of 160.57 is refreshed (red line on the chart), which will lead to a quick decline in the pair. The key target for sellers will be the level of 159.83, where I plan to exit the shorts and immediately buy in the opposite direction (expecting a movement of 20-25 pips in the opposite direction from the level). Sellers will return at any moment; all it takes is a hint from the central bank. Important! Before selling, ensure that the MACD indicator is below the zero mark and is just beginning to decrease from it.
• Scenario #2: I also plan to sell USD/JPY today if there are two consecutive tests of the price at 160.87 when the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a market reversal downwards. A decline to the opposite levels of 160.57 and 159.83 can be anticipated.

What's on the Chart:

• Thin green line – entry price for buying the trading instrument;
• Thick green line – estimated price for placing Take Profit or manually securing profits, as further growth above this level is unlikely;
• Thin red line – entry price for selling the trading instrument;
• Thick red line – estimated price for placing Take Profit or manually securing profits, as further decline below this level is unlikely;
• MACD Indicator. When entering the market, it is important to be guided by the zones of overbought and oversold.

Important: New traders in the Forex market should make decisions about market entry very cautiously. Before the release of important fundamental reports, it is best to stay out of the market to avoid sharp fluctuations in the exchange rate. If you decide to trade during news releases, always set stop orders to minimize losses. Without setting stop orders, you can quickly lose your entire deposit, especially if you do not use money management and trade with large volumes.

And remember, for successful trading, it is essential to have a clear trading plan, like the one outlined above. Spontaneous trading decisions based on the current market situation are inherently a losing strategy for intraday traders.