USD/JPY broke through the 125.77 mark on Monday before finding resistance. The single currency is already facing strong multi-year resistance at the 125.85 level as discussed earlier. If prices are able to push through 125.85, please expect a swift resersal thereafter. There are no confirmed signals for a bearish reversal from here as bears are looking sidelined.
USD/JPY price action needs to break below the initial support seen around 121.30 to confirm a top in place. Most traders might be waiting for the above break and a subsequent pullback before initiating short positions again. It is worth noting that the last swing high at 125.77 has been accompanied by a strong bearish divergence on RSI (not shown today).
The above could be seen as an indication of potential reversal ahead. USD/JPY has rallied over 1,000 since breaking out of its triangle consolidation structure above the 116.35 mark. A meaningful retracement could be due from here if not a trend reversal. Only a break below 114.60 will confirm a trend reversal.
Trading plan:Preparing for a potential drop against 126.00
Good luck!