USD/JPY is falling, having reached a high of about 150.77. This strong technical correction could continue over the next few days as the Yen has been heavily overbought.
During Friday's Asian session, the yen started a sharp decline, suggesting that any technical bounce will be seen as an opportunity to sell.
We can see on the H4 chart that the Japanese yen is trading within an uptrend channel formed since October 5th.
USD/JPY has been moving within this bullish channel for a few weeks. Having reached the top of this channel, it dropped in the last few hours. Now, the yen is trading around the bottom of this channel.
As the instrument is at key levels around 149.63, we could expect a technical bounce to occur. So, USD/JPY could reach the area of 150.00 (8/8 Murray). Above this level, we could expect it to climb to +1/8 Murray at 151.56.
On the other hand, in case the Japanese Yen breaks the uptrend channel and consolidates below 149.50, we could expect it to reach the 200 EMA located at 148.80 and finally, it could fall towards 6/8 Murray located at 146.87.
Our trading plan is to sell USD/JPY only if it consolidates below the psychological level of 150.00. Below this level, there is a strong possibility of a technical correction in the coming days.
