Near term outlook in USD/JPY is rather mixed for the moment as last week's break of 76.57 was not followed by follow-through selling. Rebound from 76.55 failed to take out 77.33 minor resistance. We'll stay neutral first. On the upside, break of 77.33 will suggest that fall from 78.22, as well as the correction from 79.52, are finished and should bring stronger rally to 78.22 and above. However, break of 76.55 again should extend the decline from 79.52 back towards 75.56 low.

In the bigger picture, 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 79.60) 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.