FX.co ★ Trading plan for USDJPY for May 02, 2022

Technical outlook:

USDJPY might have carved a meaningful top around 131.25 mark on April 28, 2022. The currency pair has slipped through 129.30 lows giving in almost 200 pips since the high. The recent rally seem to be corrective until now and could resume lower soon. Bears need to hold below 131.25 mark to keep the structure intact.

USDJPY had earlier rallied from 127.00 mark through 131.25 within a short span (two trading sessions). Importantly, the above rally of over 400 pips was accompanied by a strong bearish divergence on the 4H RSI. The phenomenon could be a potential trend reversal and a break below 127.00 initial support will confirm this scenraio.

Alternatively, if prices push through the 131.25 mark consistently, bulls will be poised to print higher highs through 132-33 zone before finding resistance. Until that happens, bears will have an edge and a break below 129.31 will accelerate further through 127.00 mark. Traders might be preparing to initiate fresh short positions now.

Trading plan:

Potential drop to 127.00 at least against 132.00

Good luck!