Technical outlook:
USDJPY continued to defy resistance and rallied through the 137.00 swing highs on Wednesday before finding resistance and reversing lower again. The currency pair dropped through the 135.95 intraday lows on Thursday. It is seen to be trading close to 135.25 at this point in writing. Bears should hold prices below the 137.00 high to be able to come back in control soon.
USDJPY has carved a religious rally since the January 2021 lows carved at around 102.59. The recent high registered at 137.00 could be a potential top. A break below 134.26 will confirm that bears are back in control. Until that happens, the currency would remain vulnerable to another test of 137.00.
USDJPY has rallied to a fresh swing high accompanied by a bearish divergence on the RSI on multiple timeframes (not shown here today). This could be seen as a potential trend reversal signal as bears might be preparing to target below 131.50 in the near term. Either way, the currency pair has got a limited upside left for now.
Trading plan:
Prepare for a potential drop soon
Good luck!
