Currency pair: USD / JPY (American dollar - Japanese yen) - trading features

Currency pair: USD/JPY

The modern stock market is represented by a variety of trading instruments. One of them is the USD/JPY currency pair, the US dollar and the Japanese yen.

This trading instrument is the main one in the Asian region. The main trade for this currency pair is 18% among intraday trades in the forex market. The Japanese currency is distinguished by a two-digit quote, which is due to its rather low cost in relation to other currencies represented on the stock market.

Features of the Japanese currency

Before talking about direct trading with this instrument, some features of the currencies presented should be considered. As for the Japanese currency, the main player here is the national bank, which has a specific structure.

The main part of the block of shares, namely 55%, belongs to the state, while the remaining 45% are divided among the largest corporations, whose shares are listed on Asian stock exchanges.

Such a division allows you to simultaneously take into account the interests of both parties, where the state is responsible for monetary policy, and large corporations, which in turn most often specialize in exports, have certain leverage on the stability of the single national currency.

Since Japan's focus is primarily on exports, strengthening the national currency is an unfavorable step, which forces the central bank to resort to constant exchange rate adjustment through foreign exchange interventions.

Features of the American dollar

The American dollar today acts as a single world currency. This trading instrument is traded with all currencies of the world, including the Japanese yen.

Also, based on the history of the stock market, it can be seen that this is the most stable currency, a sharp change in which can only be affected by significant economic or political events in the US foreign and domestic policy.

Technical analysis of a currency pair

The USD/JPY trading instrument can be attributed to the trend group without any doubt. Here there is a long-term following of the price ratio in one of the directions. Because of this, traders can use any available technical analysis tools for analysis.

For long-term trades, the use of moving averages, as well as trend channels, is great. Intraday trading is carried out using strong support and resistance levels. Also, intraday trading is available using Fibonacci lines.

The most appropriate moment to start trading is the opening of the Asian session, whose time interval starts at 22:00 GMT and ends at 09:00/.

Using this currency instrument in your work, you should pay attention to the following features:

  • Fluctuations of this pair can be used as leading signals for the subsequent opening of transactions in the Australian and New Zealand dollars;
  • The opening session of the stock exchange in Shanghai has a direct impact on all currency pairs where the Japanese yen is present;
  • The main volume of sessions falls on the conclusion of export contracts, as well as the influence of the Bank of Japan in the event of foreign exchange interventions;
  • Official currency news that is published before the opening of the Japanese and Australian stock exchanges have a direct impact on the subsequent intraday price movement, as well as on the continuation or change of the trend direction.

USD/JPY chart

A live chart for the USDJPY currency pair will come in handy for analyzing and identifying a good point for entering the trail.


Technical analysis

Volatility of a currency instrument

This trading instrument does not have a clear correlation with other major currency pairs.

Of course, it cannot be said that it is completely absent, but its percentage is so small that it makes no sense to use this data to open related transactions in other trading instruments.

Otherwise, there is a high risk of reducing the transaction to significant losses.

During the trading day, the volatility of the USD/JPY pair rarely exceeds 40-50 points, which is a fairly average value compared to other instruments. However, when strong fundamental news is published, the currency pair can react accordingly with sharp fluctuations, which often reach 100-200 points.

As a rule, after such sharp movements, a number of price corrections occur to stabilize. The maximum periods of volatility of the USD/JPY pair can reach 300 points, and usually occur during periods of currency interventions.

Fundamental analysis of the USD/JPY trading instrument

The behavior of this trading instrument is highly dependent on fundamental events. These include speeches by political leaders in Japan, Australia and the United States.

In subsequent periods after serious statements, the USD/JPY rate can behave extremely nervously, which is why it is best for an inexperienced trader to refuse to open transactions at such moments and wait for a lull.

After a deep analysis of this instrument, we can say with confidence that the pair has high liquidity, which is well supported by certain actions of the Japanese central bank, as well as large stock and commodity transactions.

The pair has a constant trend movement and relatively low volatility, which is perfect for novice traders.

However, even with excellent trading conditions, one should not forget about stock events that can make significant adjustments to the price ratio of the USD/JPY pair.

To do this, before opening deals, it is recommended to look at the economic calendar, where upcoming events are always published in advance, which can greatly affect the change in currency quotes.

USD/JPY trading periods

As mentioned earlier, the key period for trading this currency instrument is the period of the Asian trading session. Next, you should divide the possible trading on this pair into the following periods:

  1. Opening of the Australian stock exchange from 22:00 to 24:00. During this period, USD/JPY is traded in small volumes with rather low volatility.
  2. The time interval from 00:00 to 00:35 GMT is characterized by the beginning of the processing of scalper pending orders. At this moment, important economic news is published from a representative of the Japanese central bank, which is characterized by sharp price jumps.
  3. In the time interval 01:00 to 06:00 GMT, fundamental news on Australia is released, which keeps the trend movement of the USD/JPY pair with minor adjustments.
  4. At 06:00, the stock exchange in Tokyo closes, which is often characterized by a rate adjustment to the value of the opening of the trading day. However, this may not happen due to the publication of important fundamental events.

Using these periods for correct trading, even a novice trader can significantly increase the state of his capital.

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