USD/JPY: Tips for Beginner Traders on January 7th (U.S. Session)

[Ben Graham]

Trade Analysis and Trading Tips for the Japanese Yen

The test of the 156.55 price level occurred at a moment when the MACD indicator had moved significantly above the zero line, which limited the pair's upward potential. The second test of 145.55, when the MACD was in overbought territory, led to the implementation of Scenario No. 2 for selling the dollar; however, the pair did not experience a major decline.

In the near term, the release of a number of important economic indicators is expected, including ADP private-sector employment data, the JOLTS report on job openings and labor turnover, and the ISM Services PMI. Market participants will carefully analyze every aspect of this data, trying to identify signs of a weakening labor market. If the ADP figure declines, this may indicate a further slowdown in hiring, which would force the Federal Reserve to continue cutting interest rates to support the labor market.

The ISM Services PMI will be another key indicator of economic health. Given the significant share of services in GDP, a decline in activity in this sector could signal a slowdown in overall economic growth.

As for the intraday strategy, I will rely more on the implementation of Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: I plan to buy USD/JPY today upon reaching an entry point around 156.60 (thin green line on the chart), with a target of growth toward the 156.91 level (thicker green line on the chart). Around 156.91, I will exit long positions and open sell positions in the opposite direction (expecting a 30–35-point move in the opposite direction from the level). A continuation of the trend supports expectations for further growth in the pair.Important! Before buying, make sure that the MACD indicator is above the zero line and is just starting to rise from it.

Scenario No. 2: I also plan to buy USD/JPY today in the case of two consecutive tests of the 156.43 price level while the MACD indicator is in oversold territory. This will limit the pair's downward potential and lead to a reversal upward. Growth toward the opposite levels of 156.60 and 156.91 can be expected.

Sell Signal

Scenario No. 1: I plan to sell USD/JPY today after a breakout of the 156.43 level (thin red line on the chart), which will lead to a rapid decline in the pair. The key target for sellers will be the 156.15 level, where I will exit sell positions and immediately open buy positions in the opposite direction (expecting a 20–25-point move in the opposite direction from the level). Pressure on the pair may return today in the case of weak U.S. data.Important! Before selling, make sure that the MACD indicator is below the zero line and is just starting to decline from it.

Scenario No. 2: I also plan to sell USD/JPY today in the case of two consecutive tests of the 156.60 price level while the MACD indicator is in overbought territory. This will limit the pair's upward potential and lead to a reversal downward. A decline toward the opposite levels of 156.43 and 156.15 can be expected.

What's on the Chart:

• Thin green line – entry price at which the trading instrument can be bought;
• Thick green line – estimated price where Take Profit orders can be placed or profits can be taken manually, as further growth above this level is unlikely;
• Thin red line – entry price at which the trading instrument can be sold;
• Thick red line – estimated price where Take Profit orders can be placed or profits can be taken manually, 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 should be extremely cautious when making market entry decisions. Ahead of major fundamental reports, it is best to stay out of the market to avoid sharp price fluctuations. If you decide to trade during news releases, always place stop-loss orders to minimize losses. Without stop-loss orders, you can lose your entire deposit very quickly, especially if you do not use money management and trade large volumes.

And remember that successful trading requires a clear trading plan, such as the one presented above. Spontaneous trading decisions based on the current market situation are an inherently losing strategy for an intraday trader.

The material has been provided by InstaForex Company - www.instaforex.com