Technical outlook:

USDJPY dropped towards 135.20 during the Asian session on Wednesday after finding resistance at around 136.36 early this week. Bears need to break below 134.70 to accelerate the fall towards 131.50 as projected on the 4H chart presented. Ideally, prices should stay below interim resistance at around 137.00 to keep the bearish structure intact.

USDJPY has produced a multi-year rally since January 06, 2021, after printing lows at around 102.59 (not seen on the displayed chart). The above rally might be complete at around 137.00 or is close to completion after yet another shallow high close to 137.50. Either way, bears are looking poised to be back in control soon.

USDJPY might have carved a lower-degree downswing between 137.00 and 134.75 in the past few trading sessions. Prices have retraced following the above drop and found potential resistance at around 136.36. If the above structure holds well, prices would stay below 137.00 and reverse sharply towards 131.50 to break below initial support.

Going forward:

USDJPY has broken below the recent trend line support while dropping towards 134.70 as seen here. Furthermore, prices have rallied and tested the backside of the trendline support, which acts as resistance at around 136.16. A potential Head and Shoulder reversal might be unfolding with the right shoulder carved at around 136.16. A break below 134.70 confirms that the price is accelerating its fall.

Trading plan:

Potential drop towards 131.50 and lower against 137.50

Good luck!