USD/JPY is trading around 141.74, approaching the top of the downtrend channel formed since December 18 and testing the 21 SMA located at 141.84. We observe a strong technical rebound of the yen on the chart after reaching the psychological level of 140.00.
Now JPY is consolidating above 2/8 Murray. If there is a sharp break of the downtrend channel, USD/JPY could approach the top of the main downtrend channel at around 142.70 formed since early December.
In case the bullish strength prevails and if the Japanese yen consolidates above the 3/8 Murray at 142.18, we could expect a continuation of the upward movement. If this scenario occurs, the JPY could have relief from the downward pressure and could reach 143.75 (4/8 Murray) and even the 200 EMA located at 145.19.
On the other hand, if the JPY fails to break the secondary downtrend channel, we could expect a technical correction. This would be seen as a signal to buy above 140.65.
The eagle indicator is giving a slightly bearish signal, but we could expect a bullish move in the coming days if a sharp break of the channel occurs.
Our trading plan for the next few hours is to buy USD/JPY above 141.80 or wait for a technical correction. As long as it trades above 140.62, it will be seen as a buying opportunity.
