The USD/JPY pair experienced a significant drop last week, indicating a short-term peak at 161.94. The presence of bearish divergence in the D MACD suggests that the decline from 161.94 is likely a corrective move within the larger five-wave rally from 140.25. The downside risk remains as long as the 160.25 support turned resistance level is intact. A sustained break below the 55-day EMA, currently at 157.67, would confirm the bearish scenario, with the next target being the 38.2% retracement level of the rally from 140.25 to 161.94 at 163.65.
Looking at the bigger picture, as long as the 151.89 resistance turned support level holds, the long-term uptrend could still resume towards 161.94 in the future. The subsequent target will depend on the depth of the ongoing correction from 161.94. However, a sustained break below 151.89 would indicate the start of a larger correction or a potential trend reversal.
In the broader long-term view, as long as the 140.25 support level remains intact, the uptrend from the 2011 low of 75.56 is expected to continue. The next target projection is at 172.08, which is the 138.2% extension of the move from 75.56 in 2011 to 125.85 in 2015 from the low of 102.58. This suggests a bullish outlook for the USD/JPY pair in the long run.