Due to protracted weakness in the Japanese yen, USD/JPY reached the resistance of 6/8 Murray around 131.25 in the European session. The highest level that has ever been reached is 131.35, the highest since April 2002.
The prevailing sentiment of risk aversion, represented by strong bearish pressure in equity markets and with major indices down, weakened the Japanese yen.
According to the 4-hour chart, we can see a technical pattern of a bullish wedge. Closing below this pattern around 130.72 will be a positive sign for USD/JPY. The currency pair is likely to drop to the 21 SMA located at 130.24 in the next few hours.
A daily close below the psychological level of 130.00 could mean an advance of the Japanese yen's strength. It could reach the support level of the uptrend channel around 129.15 and even 5/8 Murray at 128.12.
The eagle indicator is giving a negative signal after the top of the downtrend channel was eventually broken. It is now hovering below this area. It could continue the bearish move in the netx few days and USD/JPY could reach the 200 EMA around 126.28.
Our trading plan for the next few hours is to sell below 6/8 Murray around 131.25 or at current price levels around 130.72 with targets at 130.24 (21 SMA), 129.15 (uptrend channel), and at 128.12 (5/8 Murray). The eagle indicator is giving a bearish signal which supports our sell strategy.
