USD/JPY’s rally continued last week and matched 100% projection of 127.20 to 137.90 from 129.62 at 140.32 already. Initial bias stays on the upside this week for 142.48 fibonacci level. on the downside, break of 138.22 support will indicate short term topping, and turn bias back to the downside for 55 D EMA (now at 135.42).
In the bigger picture, rise from 127.20 is seen as the second leg of the corrective pattern from 151.93 high. Stronger rally would be seen to 61.8% retracement of 151.93 to 127.20 at 136.34. Sustained break there will pave the way back to retest 151.93. On the downside, however, break of 133.73 support will argue that the pattern could have started the third leg through 127.20 low.
In the long term picture, price action from 151.93 is seen as developing into a corrective pattern to up trend from 75.56 (2011 low). While deeper decline cannot be ruled out, downside should be contained by 38.2% retracement of 75.56 to 151.93 at 122.75.
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