Technical outlook:
USDJPY dropped through 128.40 on Thursday falling in line with expectations. The currency pair has now taken out initial support around 128.50 and prices have also broken its immediate trend line support. Bears would now like to remain in control and hold prices below the 131.34 high, which was printed early this week.
USDJPY is seen to be trading around 128.55 level at this point in writing as interim support is expected here. The RSI on the 4H chart has slid through the 30 mark, which is close to oversold territory. Furthermore, initial support has been taken out at 128.50, hence a near-term pullback is expected soon.
USDJPY needs to stay below 131.34 potential resistance to keep the bearish structure intact. Bears will be setting their eyes on 127.00, which is next-in-line support. Traders might want to hold short positions and add more on pullback rallies towards the 130.00 mark. The medium-term target could be 127.00 and up to 125.00 levels.
Trading plan:
Potential drop through 127.00 and 125.00 against 132.00
Good luck!
