FX.co ★ Trading Signal for USD/JPY for April 29 - 30, 2022: sell below 130.57 (21 SMA - oversold)

USD/JPY is trading around the psychological level of 130.00. After having reached the zone +2/8 Murray at 131.25, the Japanese yen is under a technical correction and is now below the 21 SMA located at 130.57.

The weakness of the Japanese yen in recent weeks has taken away its status as the safe-haven asset preferred by the market. The US dollar and gold are the assets that investors turn to in the face of any uncertainty.

The strength of the US dollar pushed the Japanese yen down. As a result, USD/JPY climbed to a key level of +2/8 Murray at 131.25. According to this indicator, this zone represents an extremely overbought level. Therefore, USD/JPY is expected to make a technical correction in the next few days. The Japanese yen could fall towards the 200 EMA located at 128.43.

Another factor that weakened the Japanese yen was the recent announcement by the BoJ that confirmed its dovish monetary policy. The central bank reiterated its commitment to maintaining negative interest rates in the coming months.

According to the technical chart, a sharp break below 128.43 could mean a change in the short-term trend and USD/JPY could reach the level of 125.00 (8/8 Murray).

According to the 1-hour chart, we can expect a pullback towards the 21 SMA located at 130.57 to sell. On the other hand, as long as the price remains trading below the psychological level of 130.00, we could continue to sell with targets at 129.21 and 128.43 (200 EMA).

On April 28, the Eagle indicator reached the extremely overbought zone around 95-points on the 1-hour chart. This is a negative sign that we could expect a technical correction in the Japanese yen in the coming days.

Our trading plan is to sell below 131.25 (+2/8 Murray) or below 130.57 (21 SMA), with targets at 129.00 and 128.12 (-1/8 Murray)