Technical outlook:

USDJPY is ready to extend its counter-trend rally towards the 129.60-70 mark in the near term. The currency pair dropped through the 127.15 lows early Asian session on Monday before finding support again. It is seen to be trading close to 127.80 at this point in writing, looking to push through 129.60-70 before resuming lower again.

USDJPY has already carved a meaningful downswing between 131.34 and 127.00 in the past few trading sessions. Also, note that bears have successfully registered themselves by breaking below their initial support at 127.00. Ideally, prices should produce a corrective rally (three waves), before bears are back in control.

USDJPY is expected to face strong resistance over the 129.60-70 zone, which is the Fibonacci 0.618 retracement of the above drop. Furthermore, the corrective rally has terminated two waves around 128.30 and 127.15 respectively. If the above structure holds well, bulls will be inclined to unfold the last-wave rally towards 129.70 soon.

Trading plan:

Potential short-term rally towards 129.60-70 against 127.00, then lower again.

Good luck!