USD/JPY surged to as high as 111.07 last week and met 61.8% retracement of 114.73 to 104.62 at 110.86 already. As a temporary top is formed, initial bias is neutral this week for consolidation. We’d expect downside of retreat to be contained above 110.02 resistance turned support to bring another rally. Above 111.07 will extend the rise from 104.62 for trend line resistance at 112.33.
In the bigger picture, corrective decline from 118.65 (2016 high) has completed with three waves down to 104.62. Rise from 104.62 is possibly resuming the up trend from 98.97 (2016 low). This will be the preferred case as long as 55 day EMA (now at 108.55) holds. Decisive break of 114.73 resistance will confirm our view and target 118.65 and above.
In the long term picture, the rise from 75.56 (2011 low) long term bottom to 125.85 top 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.
