Technical outlook:
USDJPY surpassed 135.60 intraday on Monday before finding resistance and pulling over. The currency pair is seen to be trading at around 135.15, the Asian session low of Tuesday, and is expected to drag further towards the 131.50 initial support. Bears will be poised to hold prices below 136.70 to keep the momentum intact for now.
USDJPY has been rallying since January 2021 after carving lows at about 102.59. The entire rally between the 102.59 lows through the 136.70 highs carved recently looks to be complete. If the above structure holds well, prices should stay below the 106.70 mark and produce a meaningful pullback/corrective wave towards 126.00 at least.
USDJPY is progressing within its first lower-degree downswing from the 136.70 highs. Bears are looking poised to remain in control from here and target below 131.50 in the near term. Also, note that prices would target below 126.36 after breaking below the immediate trend line and price support at 131.50.
Trading plan:
Potential drop through 126.00 against 137.00
Good luck!
