FX.co ★ Trading Signal for USD/JPY for January 24 - 25, 2023: buy if breaks 130.30 (21 SMA - 2/8 Murray)

Early in the American session, we can see that the Japanese Yen is trading around 130.18 consolidating above the 21 SMA located at 129.54. We can observe a Doji which means that the market is waiting for some data so that it can define the trend of the pair.

According to the 4-hour chart, we can see that the Japanese Yen has broken sharply the downtrend channel formed since early January. The instrument is now consolidating above this resistance line, which has become strong support.

Additionally, we can see that the USD/JPY pair is forming a bullish pennant pattern. This is a sign that if it breaks and consolidates above 130.30, we could expect the pair to reach 2/8 Murray at 131.25 and even reach the 200 EMA located at 132.65 in the next few days.

USD/JPY has a strong resistance located at 131.25 (2/8 Murray). This has been evident since early January. The instrument tried three times to break it and was rejected and then we saw another attempt on January 17 and it was also rejected.

In case USD/JPY reaches this zone again and fails to consolidate, we could expect a drop below this level which will be seen as a sign to sell around 131.25 with targets at 129.54.

As the Japanese Yen consolidates and trades above 129.50 and above the downtrend channel that was broken, any pullback will be seen as a signal to buy with short-term targets at 132.65 and 3/8 Murray located at 134.37.