USDJPY: Expect Retracement To Retest 5-Month Low

USDJPY started the year by breaking out of a bearish trendline that lasted through November and December. We foresee a retracement from current levels after the pair failed to advance above previous resistance zones around 144.02 (R1) and 144.68 (R2).

RSI on the hourly timeframe shows bearish divergence, suggesting the recent rally is losing steam and a retracement is probable.

Sell Entry: 144.369
SL: 146.02
TP: 141.00

We do not eliminate the possibility of another rally to retest R2. In the event of a rejection from R2, it would form a double top pattern that will provide additional validation for a bearish trend reversal to our downside target.