USD/JPY: Tips for Beginner Traders on October 16th (U.S. Session)

[Redator]

Trade Analysis and Recommendations for the Japanese Yen

The price test at 151.23 in the first half of the day occurred when the MACD indicator had already moved significantly above the zero line, which limited the pair's upward potential. For that reason, I did not buy the dollar. A little later, there was another test of 151.23, this time under the right conditions — the MACD had just begun to move upward from the zero line, confirming the correct entry point for a long position. As a result, the pair rose by 20 points.

In the second half of the day, focus will shift to the Philadelphia Fed Manufacturing Index, as well as speeches by FOMC members Christopher Waller and Michael S. Barr. A dovish tone from policymakers could trigger another wave of decline in USD/JPY. The Philadelphia Fed Index, a barometer of industrial activity, will be the first key indicator of sentiment. A reading above forecasts will strengthen the dollar's position, while a weaker result will signal potential decline.

However, the key drivers will be the speeches by Waller and Barr. Their comments regarding inflation and the future trajectory of interest rates will carry exceptional weight. The market will react sharply to any hints that shed light on the Fed's next moves. A "dovish tone" will be the decisive signal for another wave of USD/JPY weakness. If policymakers express readiness to cut rates, it will further undermine the dollar's appeal as a safe-haven asset. Investors will begin to reassess their positions, likely leading to a broad sell-off of USD in favor of JPY.

As for intraday strategy, I will mainly rely on implementing Scenarios #1 and #2.

Buy Signal

Scenario #1: Today, I plan to buy USD/JPY when the price reaches the 151.37 entry point (green line on the chart), targeting a rise to 151.86 (thicker green line). Around 151.86, I plan to close buy positions and open sell positions in the opposite direction, expecting a 30–35 point retracement. A rise in the pair can be expected as part of the continuing upward trend.

Important: Before buying, make sure the MACD indicator is above the zero line and just beginning to rise from it.

Scenario #2: I also plan to buy USD/JPY if there are two consecutive tests of the 151.06 level while the MACD is in the oversold zone. This will limit the pair's downward potential and trigger an upward reversal. A rise toward 151.37 and 151.86 can then be expected.

Sell Signal

Scenario #1: Today, I plan to sell USD/JPY after it breaks below the 151.06 level (red line on the chart), which should lead to a rapid decline in the pair. The main target for sellers will be 150.61, where I plan to close short positions and open long positions in the opposite direction, expecting a 20–25 point rebound. Downward pressure on the pair may return if the Fed members adopt a dovish stance.

Important: Before selling, make sure the MACD indicator is below the zero line and just beginning to move downward from it.

Scenario #2: I also plan to sell USD/JPY if there are two consecutive tests of the 151.37 level while the MACD is in the overbought zone. This will limit the pair's upward potential and lead to a downward market reversal. A decline toward 151.06 and 150.61 can be expected.

Chart Legend

• Thin green line – Entry price for buying the instrument
• Thick green line – Suggested Take Profit or manual profit-taking level, as further growth above this point is unlikely
• Thin red line – Entry price for selling the instrument
• Thick red line – Suggested Take Profit or manual profit-taking level, as further decline below this point is unlikely
• MACD indicator – When entering the market, focus on overbought and oversold zones

Important Note for Beginners

Forex beginners should be very cautious when deciding when to enter the market. Before major fundamental reports are released, it's best to stay out of the market to avoid getting caught in sharp price swings. If you decide to trade during news events, always set stop-loss orders to minimize losses. Without stop-losses, you can quickly lose your entire deposit, especially if you don't use money management and trade large volumes.

And remember: to trade successfully, you must have a clear trading plan, like 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