USD/JPY’s fall from 114.49 extended lower last week. The development affirmed the view that rebound from 108.81 is completed at 114.49. More importantly, whole correction from 118.65 is possibly still in progress. Initial bias stays on the downside this week for 108.81 support first. Break there will target 61.8% retracement of 98.97 to 118.65 at 106.48. On the upside, break of 112.41 minor resistance is needed to indicate short term bottoming. Otherwise, outlook will remain mildly bearish in case of recovery.
In the bigger picture, the corrective structure of the fall from 118.65 suggests that rise from 98.97 is not completed yet. Break of 118.65 will target a test on 125.85 high. At this point, it’s uncertain whether rise from 98.97 is resuming the long term up trend from 75.56, or it’s a leg in the consolidation from 125.85. Hence, we’ll be cautious on topping as it approaches 125.85. If fall from 118.65 extends lower, down side should be contained by 61.8% retracement of 98.97 to 118.65 at 106.48 and bring rebound.
In the long term picture, the rise from 75.56 long term bottom to 125.85 top is viewed as an impulsive move. Price actions from 125.85 are seen as a corrective move which could still extend. But, up trend from 75.56 is expected to resume at a later stage for above 135.20/147.68 resistance zone.
