USD/JPY’s fall from 114.54 accelerated to as low as 111.82 last week. Current developments suggests that rise from 104.62 has completed at 114.54 after rejection from 114.73 key resistance. USD/JPY is now correcting this whole rise. Initial bias is neutral for consolidation above 111.82 temporary low first. But upside of recovery should bel limited below 113.28 resistance to bring another fall. On the downside, break of 111.82 will target 38.2% retracement of 104.62 to 114.54 at 110.75. We’ll look for bottoming signal above 109.76 key support.
In the bigger picture, corrective fall from 118.65 (2016 high) should have completed with three waves down to 104.62. Decisive break of 114.73 resistance will likely resume whole rally from 98.97 (2016 low) to 100% projection of 98.97 to 118.65 from 104.62 at 124.30, which is reasonably close to 125.85 (2015 high). This will stay as the preferred case as long as 109.76 support holds. However, decisive break of 109.76 will dampen this bullish view and turns outlook mixed again.
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.