USD/JPY Price Analysis: Bullish harami looms, with bulls targeting 131.50

• USD/JPY remains downtrend but is about to form a bullish harami candle pattern, suggesting an upward correction on the cards.
• USD/JPY Price Analysis: Once it clears 129.50, it could rally towards 131.57 before turning neutral.

USD/JPY slumps in a choppy New York trading session and edges beneath 130.00 after a round of US economic data, suggesting the US Federal Reserve (Fed) could begin to hike rates in 25 bps sizes. Therefore, the Japanese Yen (JPY) strengthened, so the USD/JPY is down 0.24%. At the time of writing, the USD/JPY is trading at 129.92.

USD/JPY Price Analysis: Technical outlook

The USD/JPY remains downward biased as the pair has remained below the 20-day Exponential Moving Average (EMA) at 130.60. Friday’s price action remains contained within the boundaries of Thursday’s high and low, opening the door for a bullish harami candlestick formation, also known as an inside day, in the regular bar chart jargon. Therefore, the USD/JPY could print a leg-up before resuming its downtrend.

Hence, the USD/JPY next resistance would be 130.00, followed by the confluence of the 20-day EMA and a downslope trendline around 130.60, which, once cleared, might send the USD/JPY climbing towards the January 24 swing high at 131.11. Break above will expose the January 18 high of 131.57.

As an alternate scenario, the USD/JPY could fall towards 129.49, January’s 27 low. Once broken, the next support would be the weekly low of 129.02, followed by the YTD low at 127.21.

USD/JPY Key Technical Levels