Early in the American session, the Japanese yen (USD/JPY) is trading around 139.89 below the psychological 1.40 and above the 21 SMA and 200 EMA. We may see a strong bullish move but with the exhaustion of strength.
USD/JPY has found a strong rejection around 139.90. If it breaks below the 200 EMA (139.79), we could expect a technical correction towards the 21 SMA located at 139.33.
According to the 1-hour chart, we can see that the Japanese yen is trading within an uptrend channel formed since July 13. USD/JPY is now showing overbought signs and a technical correction is likely if the price returns below 139.80.
In case the Japanese yen breaks and consolidates above 140.17, we could expect it to reach the area of 6/8 Murray which represents strong resistance and which could also serve as a rejection for the pair so that we could take advantage of selling USD/JPY.
Our trading plan for the next few hours is to sell below 139.90 with targets at 139.40 and 139.06 (5/8 Murray) and finally, at the bottom of the uptrend channel around 138.60.
The Eagle indicator has entered the extremely overbought zone around 95 points. This is a clear-cut sign that the Japanese could correct in the next few hours that would be seen as an opportunity to sell.