Early in the American session, the Japanese Yen reached the psychological level of 140,000 and since then we saw a technical bounce. USD/JPY is likely to reach the 21 SMA level located at 140.93 and could even reach the top of the downtrend channel around 141.17.
On July 10, the Eagle indicator reached the 5-point zone which represents an extremely oversold market. So, we expect the Japanese day to make a technical rebound in the next few hours.
Having reached the psychological level of 145.00, USD/JPY reversed its trend and is now in a downward phase. Hence, any technical rebound in the short term could be seen as a signal to resume sell positions.
In the event that the USD/JPY pair breaks sharply above the downtrend channel formed since July 5, we could expect it to reach the 7/8 Murray zone located at 142.18 and ultimately could reach the 200 EMA located at 143.09.
Our trading plan for the next few hours is to buy the USD/JPY pair above 140.60, with targets at 140.93 (21 SMA) and 141.17 (top of the bearish channel). In case the yen fails to break the downtrend channel, it could be seen as a signal to sell below 141.25.
