Technical outlook:
USDJPY printed a marginal high around 131.34 mark on Monday. It is quite possible for the currency pair to push through 131.50-60 before terminating its multi-month rally. The hourly chart presented today is suggesting a peak to be soon carved as bears prepare to come back in control. Watch out for the 131.55 level to produce a bearish turn.
USDJPY is now supported at 128.50, followed by 127.00; while interim resistance is seen just above 131.50 level respectively. A break below 128.50 will confirm that the currency has topped out and bears are back in control. The immediate trend line support would also break, indicating a potential trend reversal.
Also, note that Monday's high around 131.34 is accompanied by a bearish divergence on the RSI as shown here. This is also a potential trend reversal indicator, which needs to be followed through price action to confirm. Aggressive traders might initiate fresh short positions between 131.20 and 131.50 levels going forward.
Trading plan:
Potential drop to 127.00 against 132.00
Good luck!
