Technical outlook:
USDJPY might have carved a meaningful top around 131.25, which was registered on April 28, 2022. Since then, the currency pair has carved a downswing through 129.30 (sliding close to 200 pips). The subsequent rally still looks corrective and might hold below 131.25 mark as bears remain poised to resume lower again.
USDJPY is probably carving a lower high, which should stay below the 131.25 level. If the above structure holds well, the currency would be well on its way towards 127.00 initial support as marked on the 4H chart here. A break lower will confirm that a meaningful top is in place and that bears are back in control.
Alternatively, a push above 131.25 will open the door to test further towards the 132.00-133.00 mark before finding resistance again. At the moment, we remain optimistic about a potential top already in place around 131.25 over the last week. A drop below 129.30 will accelerate further through 127.00 in the short term.
Trading plan:
Potential drop through 127.00 against 132.00
Good luck!
