Early in the European session, the Japanese yen is trading around 139.83 above the 21 SMA and below the 6/8 Murray. Yesterday, we could see that the Japanese made a strong technical rebound above 5/8 Murray located at 139.06 and reached the psychological level of 140.
The USD/JPY pair is trading inside a downtrend channel formed since May 23. Yesterday in the American session, the yen pair reached the top of the downtrend channel and failed to break it. Now, we can observe a technical correction. If USD/JPY falls and consolidates below 139.76 (21 SMA), we could expect a corrective movement and the price could reach 139.06 and 137.90 which coincides with the bottom of the downtrend channel.
The Eagle indicator is giving a negative signal. The Japanese yen is expected to trade below the psychological level of 140 and it could reach the 200 EMA located at 137.55 in the next few days.
A decisive break below the low of June 6, located at 139.02, could exert downward pressure on the pair towards the price levels of March 8 at 137.92. Finally, the instrument could reach the low of May 18 at 137.45.
On the other hand, a break of the downtrend channel and a close on daily charts above 140.30 will push the pair towards the high of May 30 at 140.93. A break above this last level could accelerate the USD/JPY pair's rally towards the 7/8 Murray level located at 142.18.
