USD/JPY’s sharp decline last week points to a medium-term high at 160.71, with a bearish divergence condition in the D MACD. But with a temporary low forming at 155.48, the initial bias turns neutral this week first. The risk will remain on the downside as long as the 55 hour moving average (now at 158.81) holds. Below 155.48 cluster support will target 152.25 (38.2% retracement from 139.87 to 160.71 at 152.74).
In the bigger picture, for now, the corrective pattern from 161.94 (2024 high) remains completed at 139.87. A rally from there is seen as a resumption of the long-term uptrend. Therefore, a break of 161.94 is expected at a later stage to resume the long-term uptrend. However, a sustained break of the 55 W EMA (now at 153.90) will weaken this view and bring back a deeper decline towards 139.87 to extend the pattern from 161.94.
In the longer term picture, the uptrend from 75.56 (2011 low) is still in progress and may be ready to resume. A strong break at 161.94 would target a 61.8% forecast of 102.58 (2020 low) to 161.94 (2024 high) from 139.87 at 176.55 in the medium term. The long-term outlook will remain bullish as long as the support at 139.87 holds, even in the event of a deep pullback.
