USD/JPY’s extended recovery last week reinforces indications of a near-term bottom near 152.87. However, following a temporary peak at 158.04, the immediate outlook is neutral. A move above 158.04 would target the 61.8% retracement level of the decline from 163.97 to 152.87 at approximately 159.72. Conversely, a break below 155.32 would restore the downside bias and expose a return to 152.87.
On the broader picture, price action from the 163.97 medium-term top is being viewed as a corrective phase against the advance from 139.87. The initial leg may have completed at 152.87, above the 152.25 structural support. A sustained move above the 55-day EMA, currently at 158.22, would reopen the path toward 163.97, although strong resistance is expected to limit further gains. Another decline is likely before the corrective pattern is complete.
The long-term outlook remains bullish as long as the 139.87 support holds, even if a deeper pullback develops. The uptrend that began at the 2011 low of 75.56 is expected to resume once the current correction from 163.97 concludes.
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