USD/JPY Weekly Outlook

USD/JPY was bounded in choppy sideway trading below 91.08 last week and there is no indication that such consolidation is finished. Initial bias remains neutral this week. Nevertheless, note that rise from 0.8813 is still in favor to continue as long as 89.62 cluster support (50% retracement of 88.13 to 91.08 at 89.60) holds. Above 91.08 will bring rally resumption to 92.14 resistance next. However, note that decisive break of 89.62 cluster support will indicate that rise from 88.13 is possibly finished and will flip intraday bias back to the downside for retesting this low.

In the bigger picture, outlook is rather mixed and we'll stay neutral for the moment. On the upside, break of 92.14 resistance will confirm that whole decline from 93.74 has completed with three waves down to 88.13 already. The corrective structure will in turn indicate that rise from 84.81 is still in progress for another high above 93.74. On the downside, break of 88.13 will reaffirm the bearish case that rise from 84.81 is completed at 93.74 already and will turn focus to 87.36 support for confirmation.

In the long term picture, downside momentum is clearly diminishing with monthly MACD back above signal line. However, there is no confirmation of long term reversal yet. Down trend from 124.13 might still continue as long as 101.43 resistance holds and might extend further towards 79.75. Nevertheless, break of 101.43 resistance will break the lower high lower low pattern and will suggest that a long term bottom is in place. The trend should then reversed to continue the sideway pattern that started at 79.75 in 1995.

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