Technical outlook:
The USDJPY pair dropped through the 131.50 low on Thursday before finding support again. The currency pair broke below the initial support around 134.00 and subsequently, below the 133.30 level, confirming a meaningful top in place around the 135.52 mark. Bears will be now inclined to hold prices below the 135.50 mark to remain in control.
USDJPY has pulled back sharply from the 131.50 mark and is seen to be trading close to the 34.75 level at this point of writing. The currency pair might have carved a lower degree downswing between 135.50 and 131.50, dropping by around 400 pips, which is now retraced. Bulls have managed to test the 0.786 Fibonacci retracement of the above drop and resistance should be strong here.
USDJPY should manage to stay below the 135.52 level to keep the bearish structure intact. If the above-mentioned scenario unfolds accordingly, bears should be back in control soon and drag prices below 126.36 in the next several trading sessions. Only a push above 135.50 would nullify the bearish outlook and delay matters further.
Trading plan:
Potential drop through 126.36 against 136.50
Good luck!
