USDJPY is moving inside an ascending trend channel on its 4-hour time frame, indicating that further gains could be in the cards for the pair.

Take note though that stochastic already reached the overbought zone and may indicate weakening buying momentum in the near term.

A small pullback might take place before the pair resumes its climb to the top of the channel around the 104.50 minor psychological resistance level.

A deeper pullback could last until the channel support near the 102.00 major psychological level.

There are no major reports lined up from the US economy today while Japan got word that the government is mulling about loosening lending restrictions in order to make up for the potential drag from the sales tax hike.

Going long at market with a stop below the channel bottom and a target at the 104.50 level could yield a high return on risk for a swing trade.

Editor’s Note: Equity investors/traders can use the Currency Shares Japanese Yen Trust (FXY, quote) ETF to take positions in the yen without a FOREX account.  The ETF looks to track the price of the Japanese Yen, minus ETF fee. The fund seeks to reflect the price of the Japanese yen with the shares representing a cost-effective investment relative to investing in the FOREX market.

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