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18.05.202608:35 Forex Analysis & Reviews: USD/JPY: Simple Trading Tips for Beginner Traders on May 18. Forex Trade Analysis

Trade Analysis and Tips for the Japanese Yen

The price test at 158.42 occurred when the MACD indicator was just beginning to move down from the zero mark, confirming the correct entry point for selling the dollar. As a result, losses were recorded on the trade as the anticipated decline in the pair did not occur.

The rise in USD/JPY continued amid an unsettled situation in the Middle East. The Bank of Japan's interventions last week have already been fully priced in, and the yen is now falling toward the 160 level. The likelihood of escalation, including potential new military confrontations involving the US and Iran, may further strengthen the dollar and weaken the yen, as investors seek the most reliable assets in such conditions. The dollar, bolstered by its status as a reserve currency and a relatively stable US economy, remains a priority choice for them.

However, it's important to remember that the closer the pair approaches the 160 yen level, the higher the probability of another Bank of Japan currency intervention to strengthen the national currency.

As for the intraday strategy, I will focus more on implementing Scenarios #1 and #2.

Buying Scenarios

Scenario #1: I plan to buy USD/JPY today upon reaching the entry point the entry point around 159.02 (green line on the chart), with a target for growth to 159.47 (thicker green line on the chart). At 159.47, I intend to exit the long positions and open short positions immediately on the rebound (anticipating a 30-35-pip move in the opposite direction from that level). It is best to return to buying the pair on corrections and significant pullbacks in USD/JPY. Important! Before buying, ensure the MACD indicator is above the zero mark and just beginning to rise from it.

Scenario #2: I also plan to buy USD/JPY today in the event of two consecutive tests of the price at 158.75 while the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to an upward market reversal. An increase can be expected toward the opposite levels of 159.02 and 159.47.

Selling Scenarios

Scenario #1: I plan to sell USD/JPY today only after updating the 158.75 level (red line on the chart), which will trigger a rapid decline in the pair. The key target for sellers will be the 158.40 level, where I intend to exit the short positions and immediately buy back in the opposite direction (anticipating a 20-25-pip move in the opposite direction from that level). Sellers may return at any moment; just a hint from the central bank is needed. Important! Before selling, ensure the MACD indicator is below the zero mark and just beginning to decline from it.

Scenario #2: I also plan to sell USD/JPY today if there are two consecutive tests of 159.02 while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a market reversal downward. A decline can be expected to the opposite levels of 158.75 and 158.40.

What is on the Chart:

• The thin green line – entry price at which the trading instrument can be bought;
• The thick green line – approximate price where take profit can be set or to realize profit, as further growth above this level is unlikely;
• The thin red line – entry price at which the trading instrument can be sold;
• The thick red line – approximate price where take profit can be set or to realize profit, as further decline below this level is unlikely;
• MACD indicator. When entering the market, it is important to be guided by overbought and oversold zones.

Important: Beginner traders in the Forex market need to make entry decisions very cautiously. It is best to stay out of the market before important fundamental reports to avoid sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without placing stop orders, you can quickly lose your entire deposit, especially if you do not use money management and trade in large volumes.

And remember, for successful trading, it is essential to have a clear trading plan, as outlined above. Making impulsive trading decisions based on the current market situation is fundamentally a losing strategy for an intraday trader.

*تعینات کیا مراد ہے مارکیٹ کے تجزیات یہاں ارسال کیے جاتے ہیں جس کا مقصد آپ کی بیداری بڑھانا ہے، لیکن تجارت کرنے کے لئے ہدایات دینا نہیں.

Jakub Novak,
Analytical expert of InstaSpot
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