Technical outlook:
USDJPY had slipped below 130.00 mark on Tuesday, registering interim low around 129.86 before finding support again. The currency pair is seen to be trading around 130.30 levels at this point in writing and is expected to reverse lower towards 128.50 and 127.00 in the near term. Bears might be inclined to keep prices below 131.34 mark.
USDJPY is trading just above its immediate trend line support and a drop below 129.85 will also break prices below the trend line. We can expect prices to then accelerate lower through 128.50, which confirms potential trend reversal. Bears will be poised to remain in control from here and target 127.00 in the medium term.
Also note that USDJPY's recent highs have been accompanied by bearish divergence on the RSI as shown here. This phenomenon is also indicating a potential trend reversal in the near term. Aggressive traders might be preparing to initiate fresh short positions around current price (130.30) with risk above 132.00 mark.
Trading plan:
Potential drop through 127.00 against 132.00
Good luck!
