USD/JPY’s pull back from 110.95 extended to 108.99 last week but recovered since then. Initial bias is mildly on the upside this week for retesting 110.95 first. Break there will resume larger rally from 102.58. On the downside, break of 108.99 will extend the correction to 108.40 support and below. But downside should be contained by 38.2% retracement of 102.58 to 110.95 at 107.75 to bring rebound.
In the bigger picture, current development suggests that the corrective down trend from 118.65 (Dec 2016) has completed at 101.18. Firm break of 112.22 resistance should confirms this bullish case. A medium term up trend could then has started for 100% projection of 101.18 to 111.71 from 102.58 at 113.11 and then 161.8% projection at 119.61. However, rejection by 111.71, followed by sustained trading below 55 day EMA (now at 107.74), will dampen the bullish view and keep medium term outlook neutral first.
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 pattern 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.
