USD/JPY’s sharp decline last week suggests that corrective rebound form 104.00 has completed at 106.10. But as a temporary low was formed at 104.34, initial bias is neutral this week first. Current development argues that larger decline from 111.71 is possibly resuming. Break of 104.34 will target 14.00 low to confirm this bearish case. This will now be the favored case as long as 106.10 resistance holds, in case of stronger recovery.
In the bigger picture, USD/JPY is still staying in long term falling channel that started back in 118.65 (Dec. 2016). Hence, there is no clear indication of trend reversal yet. The down trend could still extend through 101.18 low. However, sustained break of 112.22 resistance should confirm completion of the down trend and turn outlook bullish for 118.65 and above.
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.