The USD/JPY pair saw a rebound from 139.57 to 153.18 last week before experiencing a temporary top and retreating. This week, the initial bias is neutral for consolidations first. However, further rally is likely as long as the minor support level of 151.18 holds. If there is sustained trading above the 61.8% retracement level of 161.94 to 139.57 at 153.39, we may see a retest of the high at 161.94. On the other hand, bearish divergence in the 4-hour MACD suggests that a break of 151.18 could indicate a short-term top and shift the bias to the downside towards the 55-day EMA at 148.05.
Looking at the bigger picture, the price actions from 161.94 appear to be part of a corrective pattern in the rise from 102.58 (2021 low). The medium-term consolidation range is likely to be between the 38.2% retracement level of 102.58 to 161.94 at 139.26 and 161.94. However, a sustained break of 139.26 could lead to a deeper medium-term decline towards the 61.8% retracement level at 125.25.
In the long term, it is too early to definitively say that the uptrend from 75.56 (2011 low) has ended. Nevertheless, a medium-term corrective phase seems to have started, with a potential risk of a significant correction towards the 55-month EMA at 133.87. This suggests that cautious optimism is warranted for the future movement of the USD/JPY pair.
