USD/JPY’s rebound from 104.45 extended higher last week and break of 106.73 resistance suggests short term bottoming. Further rise is expected this week as long as 105.73 minor support holds. Sustained trading above 55 day EMA (now at 107.17) will pave the way to 109.31 key resistance. On the downside, break of 105.73 minor support will turn bias back to the downside for retesting 104.45 low instead.
In the bigger picture, decline from 118.65 (Dec 2016) is still in progress and the pair is staying well inside long term falling channel. Firm break of 104.69 will target 100% projection of 118.65 to 104.62 from 114.54 at 100.51. For now, we’d expect strong support above 98.97 (2016 low) to contain downside to bring rebound. In any case, break of 109.31 resistance is needed to be the first sign of medium term bottoming. Otherwise, further decline will remain in favor in case of 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.
