FX.co ★ Trading plan for USDJPY for January 31, 2022

Technical outlook:

USDJPY had rallied through 115.60-65 zone over the last weel before pulling back. The currency has carved an Engulfing Bearish candlestick signal on 4H timeframe followed by a lower high at 115.60 level. It is seen to be trading close to day's low around 115.30 at the time of writing and is expected to accelerate lower in the near term.

USDJPY will confirm that bears are back in control on a break below 115.00-10 zone. The currency pair should be hearing toward 112.50 and 111.00 levels in the next leg lower. Prices need to stay below 116.30-40 mark for the above bearish view to remain intact. The daily chart is also producing a potential tweezer top pattern indicating a turn lower ahead (not shown here).

USDJPY is also seen to be carving a classic Head and Shoulder reversal pattern as highlighted on the 4H chart here. The Head is seen around 116.30-40 mark, Left Shoulder around 115.50-60 and Neck line around 113.10-20 levels respectively. Furthermore, the Right Shoulder seems to be in place around 115.60 mark. Watch out for a sharp reversal lower with 116.30-40 intact.

Trading plan:

Potential drop through 112.50 against 116.50

Good luck!