USD/JPY: Simple Trading Tips for Beginner Traders on October 16. Analysis of Yesterday's Forex Trades

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Trade Analysis and Trading Advice for the Japanese Yen

The test of the 151.52 price level occurred at a moment when the MACD indicator had already moved significantly above the zero line, limiting the pair's upward potential. A similar situation unfolded in reverse later in the day near the 151.30 level. As a result, I did not execute any trades.

The dollar continues to lose ground against the yen, and there appear to be few, if any, drivers that could reverse this negative trend in the near future. The lack of meaningful macroeconomic data capable of supporting the U.S. currency, combined with dovish commentary from Federal Reserve officials, continues to put pressure on the dollar.

Today, Japan released weak data showing a decline in machinery and equipment orders, as well as a fall in the services PMI. However, the yen barely reacted, highlighting the dollar's current weakness in this pair. This paradox underscores that, at the moment, the dominant driver of USD/JPY is not the state of the Japanese economy, but rather the vulnerability of the U.S. dollar. Typically, weak macroeconomic figures from Japan would lead to yen depreciation, but in this case, that effect is being offset by dollar weakness driven by expectations of further easing in Fed monetary policy.

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

Buy Scenarios

Scenario No. 1: I plan to buy USD/JPY today if the price reaches the entry level near 151.23 (green line on the chart), targeting a rise toward 151.79 (thicker green line on the chart). Around the 151.79 area, I intend to exit long positions and open short positions in the opposite direction, expecting a move of 30–35 pips downward. Buying the pair is best done following corrections and significant dips. Note: Before entering a buy trade, make sure that the MACD indicator is above the zero line and just beginning to rise from it.

Scenario No. 2: I also plan to buy USD/JPY today if the 150.92 level is tested twice in a row while the MACD indicator is in the oversold zone. This would limit the pair's downside potential and likely trigger an upward reversal. A move up toward the opposite levels of 151.23 and 151.79 can be expected.

Sell Scenarios

Scenario No. 1: I plan to sell USD/JPY today only after the price breaks below 150.92 (red line on the chart), which could lead to a quick decline. The key target for sellers will be the 150.46 level, where I intend to exit short positions and open long positions in the opposite direction, aiming for a 20–25 pip rebound upward from that level. It's best to sell from as high a level as possible. Note: Before entering a sell trade, make sure that the MACD indicator is below the zero line and just beginning to decline from it.

Scenario No. 2: I also plan to sell USD/JPY today if the 151.23 level is tested twice in a row while the MACD indicator is in the overbought zone. This would limit the pair's upward potential and trigger a reversal downward. A decline toward the opposite levels of 150.92 and 150.46 can be expected.

Chart Indicators Explanation

The thin green line represents the entry price for buying the trading instrument.

The thick green line indicates the anticipated price where Take Profit orders can be placed or profits manually secured, as further growth above this level is unlikely.

The thin red line marks the entry price for selling the trading instrument.

The thick red line indicates the expected price where Take Profit orders can be placed or profits manually secured, as a further decline below this level is unlikely.

The MACD indicator should be used when entering trades by focusing on overbought and oversold zones.

Note: Beginner traders in the Forex market must make entry decisions with great caution. Before the release of key fundamental reports, it is best to stay out of the market to avoid getting caught in sharp price fluctuations. If you choose to trade during news events, always set stop-loss orders to minimize losses. Trading without stop-loss orders can quickly wipe out your deposit, especially if you don't apply money management and operate with large volumes.

And remember, for successful trading, you must have a clear trading plan—like the one presented above. Making spontaneous trading decisions based on current market conditions is an inherently losing strategy for intraday traders.

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