Technical outlook:

USDJPY grew through 129.28 on Tuesday falling in line with our projections. The currency pair remains just shy of 129.40, which is the Fibonacci point of convergence as seen on the 4H chart presented here. Bears will be poised to come back in control and hold prices below 131.34 to keep the medium-term structure intact.

USDJPY earlier carved a meaningful downswing between 131.34 and 126.36, which has been now retraced up to the Fibonacci 0.618 levels near 129.40. Ideally, bears will now drag prices lower towards 125.00 and 121.00 in the next several trading sessions. The probability remains for another shallow high towards 129.50 before reversing lower again.

USDJPY is also producing a potential Head and Shoulder reversal after Neckline support was broken at 127.00. The Head remains at 131.34, the Left Shoulder around 129.40 and the potential Right Shoulder is also around the 129.25-40 zone. If the above structure holds well, the currency pair is poised for a sharp reversal towards 125.00 at least.

Trading plan:

Potential drop to 125.00 and 121.00 against 132.00

Good luck!