USD/JPY edged higher to 110.67 last week but was limited well below 55 day EMA and reversed. Current development suggests that corrective recovery from 109.02 has completed. Initial bias remains on the downside this week for 109.02 first. Break will resume fall from 112.40 and target 61.8% retracement of 104.69 to 112.40 at 107.63. In any case, near term outlook will stay bearish as long as 55 day EMA (now at 110.72) holds.
In the bigger picture, USD/JPY is staying inside falling channel from 118.65. Current development suggests that rebound from 104.69 is only a corrective move. And fall from 118.65 is not completed yet. Decisive break of 104.69 will extend the down trend towards 98.97 support (2016 low). For now, we’d expect strong support above there to bring rebound.
In the long term picture, the rise from 75.56 (2011 low) long term bottom to 125.85 (2015 high) is viewed as an impulsive move, no change in this view. Price actions from 125.85 are seen as a corrective move which could still extend. In case of deeper fall, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77. Up trend from 75.56 is expected to resume at a later stage for above 135.20/147.68 resistance zone.
