• USD/JPY shorts are in the market but need to break 135.20.
• USD/JPY bears eye a break of 135.20 to open the risk of a move to 134.00.

USD/JPY could be setting itself up for a fade on rallies to break trendline support. The following illustrates a bearish bias given the week's template so far.

USD/JPY technical analysis

On the face of it, things would appear bullish given the trendline and holding above the 135.20s horizontal support that guards 134.05 below it. 

However, when zooming down to the week's template so far, we can see a failed break out on Tuesday that was followed up by shorts on Wednesday and breaking structure around 135.70/90:

We have Day 1 shorts  (D1S) and Day 2 Shorts in the market which is building the case for a significant move lower. The thesis is that bears are lurking up high and will be looking to sell at a premium, fading any rallies in the high-volume sessions such as in London and US. A break of 135.20 opens the risk of a move to 134.00 for the near future for a test of last week's lows.