USD/JPY could be set to stage a much bigger recovery in coming sessions, as the price action points to an oversold market.
Investors in Japan's yen have jumped at what they see as the clearest sign yet from the country's monetary authorities that the end of ultra-low interest rates is fast approaching, opening the floodgates to
However, there are signs that those yen buyers could well be overextended in the short-term.
USD/JPY's long tail on Thursday's candlestick line points to a downside rejection, which increases the likelihood of a bigger recovery to test the kijun line -- the midpoint of the last 26 trading days -- currently at 146.76.
The failure to close below the 142.85 Fibo, a 61.8% retrace of the 137.25 to 151.92 (July to November) EBS rise, hints at a bear trap.
A bear trap is set when a market breaks below a technical level but subsequently reverses and is usually a bullish sign.
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