Despite dipping to 77.13 last week, USD/JPY quickly recovered back into established range. Near term outlook is a bit mixed and we'll stay neutral. Nonetheless, note that rebound from 76.57 is treated as the second leg of the consolidation pattern from 79.52. Hence, while above 78.09 will bring another rise through 78.28 resistance, we'd expect strong resistance below 79.52 to bring another near term fall to continue the consolidation, as the third leg. Meanwhile below 77.13 will suggest that recovery from 76.57 is finished and would flip bias to the downside to this support and below.
In the bigger picture, note again that there is no sign of long term trend reversal in USD/JPY yet even though downside momentum is diminishing with bullish convergence condition in weekly MACD. USD/JPY is still trading inside the falling channel that started back in 2007 at 124.13, and below the falling 55 weeks EMA. Not to mention that it's far below the falling 55 months EMA. Rebound from 75.56 low could extend higher and beyond 80 psychological level. But it could turn out to be a corrective three wave rally in the end. So, we'd at least prefer to see sustained break of 55 weeks EMA (now at 80.15) before considering the case of reversal. And break of 85.51 resistance will need to confirm. Otherwise, anything happens now will be viewed as corrective and an eventual break of 75.56 low to 70 psychological level is still favored.
In the long term picture, the long term down trend in USD/JPY is still in progress. Such down trend is expected to extend further into uncharted territory with 70 psychological level as next target. In any case, we'd at least need to see sustained break of 85.51 before considering trend reversal.