USD/JPY edged higher last week to 109.35, but turned sideway again quickly. Initial bias remains neutral this week first. We’d still expect consolidation to be brief with 108.33 minor support holds. Break of 109.35 will resume the larger rise from 102.58 long term channel resistance at 110.02 next. However, on the downside, break of 108.33 will indicate short term topping. Intraday bias will be turned to the downside for correction.
In the bigger picture, focus is now back on long term channel resistance (now at 110.02). Sustained break there will indicate that the down trend from 118.65 (Dec 2016) has completed. Further break of 112.22 resistance will confirm this bullish case and target 118.65 next. However, rejection by the channel resistance will keep medium term outlook bearish.
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 pattern 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.