Technical outlook:
USDJPY slipped through 134.70 during the Asian session on Monday after finding short-term resistance in the 135.20-30 zone on Friday. The currency pair is looking to drag below 134.00 in the near term to complete its first wave, which began at 136.70 last week. Bears are expected to remain in control for now.
USDJPY has rallied from the 102.50 lows printed on January 06, 2021, to the 136.70 high. The larger-degree upswing should be retraced before the next leg higher could resume. Bears are targeting below 126.36 to terminate the corrective drop, which is also close to the Fibonacci 0.382 retracement of the entire rally (not seen on the chart).
USDJPY is carving its initial bearish wave between 136.70 and below 134.00 in the immediate term. Once complete, we can expect a corrective rally back to the 135.20-30 area, before bears are back in control. Traders might be preparing to initiate fresh short positions after the corrective pullback is complete.
Trading plan:
Potential drop through 126.00 against 137.00
Good luck!
