Technical outlook:
USDJPY climbed above 130.24 during the late New York session on Wednesday before hitting resistance. The currency has pulled back since then and is seen to be trading close to 129.75 at this point in writing. Bears will remain poised to hold prices below 131.34 and drag lower towards 125.00 in the next few trading sessions.
USDJPY rose through the Fibonacci 0.786 retracement of the entire drop between 131.34 and 126.36 before turning lower. The wave structure is presenting a bearish scenario against 131.34 as bears take control. A drop below 127.70 will confirm that a meaningful lower top is in place at around 130.24.
USDJPY has carved its larger degree downswing between 131.34 and 126.36, followed by a corrective upswing through 130.24. If the above structure holds well, prices would stay below 131.34 and drag swiftly below 125.00 and 121.00 levels going forward. Traders might be preparing to initiate fresh short positions here.
Trading plan:
Potential drop towards 125.00 and further against 132.00
Good luck!
