31.08.202609:44 Forex Analysis & Reviews: USD/JPY: Simple Trading Tips for Beginner Traders on August 31. Analysis of Yesterday's Forex Trades

Trade Analysis and Tips for the Japanese Yen

The price test at 159.79 occurred when the MACD indicator was beginning to move upward from the zero mark, confirming the correct entry point to buy the dollar. As a result, the pair rose by 30 pips.

The dollar strengthened against all currencies after Kevin Warsh's tough speech at Jackson Hole. The Federal Reserve chair indicated that the central bank's focus should be on prices and supported this with alarming data. The assessment of the economy sounded confident, and the statement that financial conditions are hard to describe as restrictive effectively pointed to readiness for further tightening, which raised American bond yields and strengthened the dollar. For the yen, such a hawkish message translated into significant pressure, especially given its sensitivity to Fed policy amid the Bank of Japan's much more cautious stance. Warsh's determination widened the gap between the two central banks' approaches, and the USD/JPY pair received a clear catalyst for growth, especially since the Fed chair directly placed the blame for 65 months of elevated inflation on the central bank itself.

However, such rapid growth in the pair has reignited discussions about currency intervention. The faster USD/JPY rises amid the Fed's hawkish stance, the more real the threat of intervention by Japanese authorities becomes. For this reason, I recommend closely monitoring the pace of the pair's movement and verbal signals from Tokyo.

Regarding the intraday strategy, I will focus on implementing scenarios #1 and #2.

Buy Scenarios

Scenario #1: I plan to buy USD/JPY today at an entry point around 159.93 (the green line on the chart), targeting a move to 160.28 (the thicker green line on the chart). At around 160.28, I intend to exit my long positions and open short positions in the opposite direction (anticipating a movement of 30-35 pips in the opposite direction from the level). It is best to return to buying the pair during corrections and significant dips in USD/JPY. Important! Before buying, ensure that the MACD indicator is above the zero mark and just starting to rise from it.

Scenario #2: I also plan to buy USD/JPY today in the event of two consecutive tests of 159.71, with the MACD indicator in the oversold area. This will limit the pair's downside potential and lead to an upward market reversal. Growth can be expected towards opposing levels of 159.93 and 160.28.

Sell Scenarios

Scenario #1: I plan to sell USD/JPY today only after the 159.71 level is updated (the red line on the chart), which will trigger a rapid decline in the pair. The key target for sellers will be 159.39, where I plan to exit my shorts and buy back immediately (anticipating a move of 20-25 pips in the opposite direction from that level). Sellers may return at any moment, so any hint from the central bank would be significant. Important! Before selling, ensure that the MACD indicator is below the zero mark and just starting to decline from it.

Scenario #2: I also plan to sell USD/JPY today if there are two consecutive tests of 159.93 while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward market reversal. A decline can be expected towards opposing levels of 159.71 and 159.39.

What the Chart Shows:

• Thin green line – entry price for buying the trading instrument;
• Thick green line – estimated price where take profit can be set, or profit can be realized, as further growth above this level is unlikely;
• Thin red line – entry price for selling the trading instrument;
• Thick red line – estimated price where take profit can be set, or profit can be realized, 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 forex traders need to make entry decisions very cautiously. Before key fundamental reports are released, it is best to stay out of the market 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 practice money management and trade large volumes.

And remember, successful trading requires a clear trading plan, as outlined above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.