USD/JPY's steep decline last week confirmed a medium-term top at 163.97, with bearish divergence on the daily chart pointing to further near-term weakness. The pair now targets support near 155.01, though the broader uptrend from 2011 stays intact unless that structural level fails.
USD/JPY's steep decline last week confirmed a medium-term top at 163.97, a signal reinforced by bearish divergence in the daily MACD. The drop from that level is seen as correcting the entire rise from 139.87. As a result, the initial bias this week stays on the downside.
The pair is heading toward the 155.01 cluster support, which lines up with the 38.2% retracement of the move from 139.87 to 163.97 at 154.76. Strong support should emerge there to bring a rebound, at least on the first attempt. Still, the risk stays tilted to the downside as long as the 160.87 minor resistance holds in the event of a recovery.
In the bigger picture, the larger uptrend is still expected to continue through 163.97 once the current correction completes, as long as the 155.01 structural support holds. A firm break of that level, however, would raise the chance that USD/JPY has entered a larger-scale correction. That scenario would open the door to a deeper fall back toward 139.87, the 2025 low, in the medium term.
Zooming out, the uptrend from 75.56, the 2011 low, remains in progress. The next medium-term target sits at the 61.8% projection of the move from 102.58 (2020 low) to 161.94 (2024 high), measured from 139.87, at 176.55. The long-term outlook stays bullish as long as the 139.87 support holds, even through a deep pullback.
Source: ActionForex
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