Early in the session American, Japanese yen (USD/JPY) is trading around 128.54, below the 21 SMA and above the 1/8 Murray. We can see a consolidation which means that there could be a weakness in the yen in the next few hours.
The USD/JPY pair is rebounding from the weekly low of 127.21. It is now trading around a key level. If it manages to stay above 128.70, we expect it to continue rising and reach the psychological level of 130.00.
Risk appetite in the stock market and the weakness of the US dollar have benefited the Japanese Yen which has strengthened. Although technically it is giving a reversal signal, this could happen if it continues trading above 1/8 Murray. This line represents a trend reversal level.
According to the 4-hour chart, we can see a consolidation since January 13. A strong technical rebound is likely to occur that could enable the price to reach the 2/8 Murray zone (131.25) and even the 200 EMA located at 133.22.
According to the eagle indicator, we can see that the Japanese yen has reached extremely oversold levels, so a technical bounce is likely to follow if it consolidates above 128.65 (21 SMA).
Our trading plan for the next few hours is to wait for the Japanese yen to consolidate above 128.65 to buy, with targets at 129.87 and 131.25 (2/8 Murray). Below 1/8 Murray, we should avoid buying as the bearish cycle is likely to resume.
