Technical outlook:
USDJPY slipped below 130.00 in this hour on Tuesday. The currency pair seems to have carved a formidable top around 131.34 on Monday before hitting resistance. Bears are now looking poised to remain in control and hold prices below the 131.34 high. Furthermore, watch out for a break below the 128.50 initial support.
USDJPY is also testing its immediate trend line support and a break there will accelerate the drop towards 128.50. Prices entering into the sell zone would indicate that bears are back in control and rallies should be sold thereafter. Early this week, the currency pair reached its projected Fibonacci extensions, barely missing out by 20 pips (131.52).
Also, note that recent highs registered after 129.40 were accompanied by strong bearish divergence on the RSI as presented here. We have been calling for a swift Dollar reversal across the board and this could be the beginning. Prices still need to break below the 128.50 support to confirm that trend has potentially reversed.
Trading plan:
Potential drop to 128.50 and 127.00 against 132.00
Good luck!
