Technical outlook:
USD/JPY dropped through 133.60 during the New York Session on Monday, almost taking out initial support around 133.40-50. The currency pair pulled back towards 134.80 intraday on Tuesday before finding resistance again. Bears will be poised to hold prices below 135.20 to keep the structure favorable.
USD/JPY might have carved a meaningful top around 135.20 after producing a religious uptrend from 102.00 lows early this year. The entire boundary between 102.00 and 135.20 needs to be ideally retraced before the rally could be resumed. A break below 126.36 will potentially confirm that a much deeper correction is on its way.
USD/JPY has carved a bearish Evening Star candlestick pattern after hitting 135.20. Also note that initial support around 133.60 was tested. If the potential resistance around 135.20 holds well, we can expect a sharp drop in prices as bears are targeting below 126.36 in the near term.
Trading plan:
Potential drop through 126.00 against 135.50
Good luck!
