Early in the American session, the Japanese yen is trading above the 21 SMA and 200 EMA. We can see on the 1-hour chart that it is trading within an uptrend channel. Currently, the Yen is testing the top of this channel, in case of breaking, it could face the weekly resistance of 135.72 and finally 7/8 Murray at 135.93.
The USD/JPY pair has advanced over 140 pips during the day, having reached the bottom of the bullish channel. This level also coincided with the 200 EMA which gave it a strong technical bounce.
The instrument is currently trading above the psychological level of 135.00 and it looks like it could go as high as 7/8 Murray at 135.93. The key will be to keep trading above 135.50.
In case the bullish force runs out and the price fails to break the top of the uptrend channel, a technical correction could occur below 135.43, with targets at the 21 SMA located at 134.77.
Conversely, a pullback towards 135.72 (weekly resistance) or 135.93 (7/8 Murray) will be seen as a signal to sell as both levels represent extremely oversold and reversal zones.
Our trading plan for the next few hours is to sell the Japanese Yen below 135.43 or to wait for a pullback to 135.73 with targets at 134.77 and 134.10 (200 EMA).
