Forex Online - Masakazu Sato's Practical Trading Techniques: Techno & Fundamentals Analysis to Predict the Future of the 3 Major Currencies [This Month's Theme | How to Perfectly Hit Price Reversals: Methods to Improve the Trading Accuracy of "MACD"]

MACD indicates the divergence and convergence of moving averages with different periods, making it a valuable technical indicator that captures price reversals at the earliest stages. The MACD and its moving average, the Signal line, generate the Golden Cross and Dead Cross, which are the most popular signals usable for actual trading. It proves extremely powerful in range-bound USD/JPY markets. Let us share viewpoints to further improve its accuracy.

Masakazu Sato Profile

Sato Masakazu. After working at a domestic bank, he joined BNP Paribas (formerly Paribas Bank) in France. He has held roles such as Interbank Chief Dealer, Head of Funds, and Senior Manager. Subsequently, he became Senior Analyst at Online FX, renowned for the highest annual trading volume. He has over 20 years of experience in the forex world. He appears on Radio NIKKEI “Stock Live Commentary! Stock Channel,” Stock Voices “Market Wide - FX Information,” and regularly provides market information on Yahoo! Finance.

MACD Cross—Detecting Price Reversals Early and Testing Its Win/Loss in USD/JPY

The novel coronavirus that started in Wuhan, China, has had a significant impact on the foreign exchange markets as an unexpected risk. With the first-stage US–China trade agreement, USD/JPY rose into the 110s due to initial optimism, but then climbed to the 112s on “Japan selling” driven by rising infections in Japan. As the virus spread globally, risk-off sentiment pushed USD/JPY down to the 107s. Currently, the 200-week moving average around 109 provides resistance and support zones for USD/JPY. Despite risk-off, the unusual trend of yen weakness suggests a possible breakout above the 200-week moving average. However, if China’s economy slows further due to the outbreak and supply chains remain disrupted, a test of sub-106 yen per dollar toward spring is conceivable.

Following the 200-day moving average last month, in this series we will continue to explain several technical indicators that help forecast the forex market’s future over subsequent installments.