USD/JPY gyrated lower last week but downside momentum was weak so far. Downside was also contained above 110.84 support. Initial bias remains neutral this week first. Nevertheless, considering bearish divergence condition in daily MACD, risks remain on the downside. Break of 110.84 support will add to the case of bearish reversal and target 109.71 support and below. On the upside, above 111.70 minor resistance will turn bias back to the upside for 112.40 instead.
In the bigger picture, medium term outlook in USD/JPY remains a bit mixed as it’s staying inside falling channel from 118.65, but there are signs of bullish reversal. On the upside, break of 114.54 resistance will revive the case the corrective fall from 118.65 has completed with three waves down to 104.69. And whole rise from 98.97 (2016 low) is resuming for 118.65 and above. But before that, outlook stays 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 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.
