Technical outlook:
USDJPY rallied through the 118.45 mark in early hours on Tuesday before hitting major resistance. The currency pair has finally reversed sharply lower by about 75 pips in the last few hours carving an Enulfing bearish candlestick pattern on the 4H chart. The reversal has come just ahead of the critical multi-year resistance around 118.66 mark.
USDJPY had earlier broken out of its triangle consolidation with constant resistance around 116.35-50 mark and increasing supports at 112.50 and 114.64 respectively. The thrust wave looks complete after rallying almost 400 pips from 114.64 lows. If correct, we should witness a continued selloff in prices back towards 114.60 mark.
USDJPY bulls have also managed to hit the Fibonacci targets around 117.70 and 118.50-60 as seen here. The second target was missed by a few pips and it could be allowed. Bears might be looking to be back in control from here and drag prices lower through 109.00 in the next few weeks time.
Trading plan:
Potential drop through 114.00 and 109.00 against 119.00
Good luck!
