USD/JPY turned into sideway trading last week and such consolidations would extend further above 86.26. Nevertheless, in case of stronger recovery, upside is still expected to be limited below 89.14 resistance and bring fall resumption. Decisive break of 86.26 will confirm that whole decline from 94.97 has resumed and should target 84.81 key support level next.

In the bigger picture, the corrective three wave structure of the rise from 84.81 to 94.97 suggests that whole down trend from 2007 high of 124.13 is still in progress. Fall from 94.97 is tentatively treated as resumption of such down trend and should extend beyond 84.81 low. Break of 84.81 will target next key level of 79.75 (1995 low). On the upside, break of 89.14 resistance will indicate that fall from 94.97 is possibly completed and bring stronger rebound. However, note that break of 94.97 resistance is still needed to be the first sign of medium term reversal. Otherwise, we'll stay bearish.

In the long term picture, current development suggests that USD/JPY has not bottomed out yet and the down trend will extend beyond 84.81 to 79.75. However, we'd be cautious on any sign of loss of momentum and reversal on next fall.