The USD/JPY pair has retreated significantly after rising to 160.58 last week. Taking into account the bearish divergence condition in the 4-hour MACD, a short-term top could be formed before the key resistance at 160.71. On the downside, a break of 159.54 would lead to a deeper pullback to the 38.2% retracement level from 155.01 to 160.58 at 158.45. However, a decisive break of 160.71 will confirm the resumption of the uptrend. This would push USD/JPY through the 161.94 level to a 100% forecast from 152.25 to 160.71 from 155.01 at 163.47 thereafter.
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 154.94) 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.
