Early in the American session, the USD/JPY pair was trading around 131.85, bouncing after hitting a low of 131.54.
The US dollar falls against the yen for the second day in a row. The pair has strengthened from the weekly high of 134.49 leaving a gap. At the moment of writing, it was trading above the weekly low, just above strong support at 131.25.
It is expected that in the next few hours the Japanese Yen will continue to bounce and can reach the SMA 21 located at 133.29. Conversely, if bearish pressure prevails, USD/JPY is expected to find strong support at 131.25. This level is key because it could act as a strong bottom and could give us an opportunity to buy.
Above 133.29 we could expect a bullish continuation and this could cover the gap left at the opening of trading on December 28. It is likely that it could reach the top of the downtrend channel around 134.65.
Our trading plan for the next few hours is to buy the Japanese Yen above 131.60 or wait for a pullback to the 2/8 Murray around 131.25 to buy with targets at 133.29 and 134.70.