Trade analysis and tips for the Japanese yen

The test of 158.04 occurred when the MACD indicator had moved well up from the zero line, which limited the pair's upside potential. For that reason, I did not buy the dollar.

Strong US services data matter because they again raise the question of how long the Federal Reserve can keep rates high. The dollar rose slightly against the yen after the ISM held up. The activity index fell only 0.5 points to 54.9 versus the preliminary estimate, while price pressure remained high. That is an inconvenient mix for the Federal Reserve, and the yen is under pressure from rate-differential returns.

Today Bank of Japan Governor Kazuo Ueda will speak at the National Securities Convention in Tokyo, and the yen could gain support if he maintains a hawkish tone. This is his first major speech after the 25 bp rate hike to 1.25% — the highest since 1995 — in a 7–2 vote. The market will look for guidance on the October 30 meeting, though traders give the chance of a second consecutive hike at about one in four. The main question is whether Ueda will still characterize financial conditions as easy, how he assesses the yen's weakness, and whether he hints the bank needs more time. A hawkish speech would benefit yen buyers and hurt those long USD/JPY, which trades near 158.

For intraday strategy, I will rely mainly on Scenario 1 and Scenario 2.

Scenarios to buy

Scenario 1: Buy USD/JPY today if price reaches the entry area around 158.25 (green line) with a target of 158.56 (thicker green line). Around 158.56, I plan to exit long positions and open short positions for a counter-move (expecting 30–35 pips). Prefer returning to longs on corrections and significant pullbacks. Important: before buying, ensure MACD is above zero and only beginning its rise.

Scenario 2: Also buy if there are two consecutive tests of 158.02 while MACD is in the oversold area. This would limit downside potential and trigger an upward reversal. Expect moves to 158.25 and 158.56.

Scenarios to sell

Scenario 1: Sell USD/JPY only after the 158.02 level is broken (red line); this should lead to a rapid decline. Sellers' key target is 157.70, where I plan to exit shorts and immediately open longs for a counter-move (expecting 20–25 pips). Sellers can return at any moment — any hint from the central bank is enough. Important: before selling, ensure MACD is below zero and only beginning its decline.

Scenario 2: Also sell if there are two consecutive tests of 158.25 while MACD is in the overbought area. This would cap upside and trigger a downward reversal. Expect declines to 158.02 and 157.70.

What's on the chart:

Thin green line – entry price at which you can buy the trading instrument.

Thick green line – approximate price where you can place Take Profit or manually lock in profits, since further upside above this level is unlikely.

Thin red line – entry price at which you can sell the trading instrument.

Thick red line – approximate price where you can place Take Profit or manually lock in profits, since further downside below this level is unlikely.

MACD indicator. When entering the market, it is important to follow the overbought and oversold zones.

Important. Beginner traders in the Forex market must be very cautious when making entry decisions. It is best to stay out of the market before the release of important fundamental reports to avoid getting caught in sharp price swings. If you decide to trade during news releases, always place stop orders to minimize losses. Without stop orders,, you can quickly lose your entire deposit, especially if you don't use money management and trade large volumes.

Remember that successful trading requires a clear trading plan, like the example above. Spontaneous trading decisions based on the current market situation are inherently a losing strategy for an intraday trader.