Technical outlook:
USDJPY has managed to rally through 115.50 mark during early trade on Friday. The currency is trading close to 115.35 at the time of writing and is expected to turn lower anytime soon. Bulls seem to have completed the counter trend rally since the currency dropped through 113.48 mark on Janyary 14, 2022. High probability remains for a bearish turn towards 112.00 at least in the near term.
USDJPY had earlier rllied through 116.35 mark before reversing sharply lower. The currency carved a meaningful down swing between 116.35 and 113.48 levels during the first two weeks of January 2022. Also note that the subsequent rally since 113.48 has unfolded into three waves and reached up to 115.50 to complete the corrective wave.
Also note that prices have tested the Fibonacci 0.618 retracement of the earlier downswing between 116.35 and 113.48 respectively. Bears might be more than willing to come back in control from here and keep resistance intact around 116.35 mark. The downside potential remains through 112.40 mark in the next few weeks.
Trading plan:
Potential drop through 112.00 against 117.00
Good luck!
