Green lines- bullish short-term channel
In our last analysis on USDJPY we noted the potential for a move higher towards 137-137.20 while at the same time warning bulls that a turnaround might be close. It is not worth increasing bullish exposure at current levels because of the warning signs from the RSI. The RSI as we said in our last post is providing us with bearish divergence signals. This is not a reversal signal but only a warning of a weakening trend. In the near term price has formed a bullish channel and as long as price is inside it, bulls remain in full control of the trend. Channel support is at 135.90 and a break below that level would be the second sign of weakness and could signal the start of a pull back.