Trading outlook:
USDJPY has followed through well after carving a potential double top pattern around 116.35-40 levels over the last week. Previous swing resistance was seen at 116.35 mark, which was re-tested at 116.33 last Thursday. It remained shy by only two pips as we called for a potential bearish reversal ahead. The currency has dropped through 115.00 levels on Monday and more downside remains possible.
USDJPY needs to break below 113.50 mark to confirm a bearish reversal going forward. The currency is expected to print yet another low below 115.00 mark before producing a corrective pullback. Short term support is seen toward 114.50, which is followed by 113.50, while resistance is now strong around 116.35-50 zone.
USDJPY might be setting up for a strong reversal lower through 112.50 and 109.00 in the near term. The downswing between 116.35 and 113.50 still remains active sine prices reversed from 116.33 mark. The Fibonacci extensions of the above downswing are pointing below 112.00 as seen here. A break below 114.50 and 113.50 will accelerate further.
Trading plan:
Potential drop through 112.00 and 109.00 against 118.50
Good luck!
