The USD/JPY has been in a sharp bullish swing since the start of November. The daily chart shows how price found a bottom in the 99-100 area before taking off in November. The long-term technical picture reflects a bullish continuation in progress. USD/JPY Weekly Chart 12/13(click to enlarge)Bullish Reversal vs. Price Top:- The weekly chart shows the strong bullish swing in the past month or so. - USD/JPY appears to be reviving the prevailing uptrend since 2011.- Note that the rally is now at the support area of a previous consolidation structure, which turned out to be a price top.- The bullish market might be challenged by this previous price top, especially if it feels overbought. It is not overbought in the weekly chart, but the RSI is above 70 in the daily chart.Fed Rate Decision:Now, this rally was definitely a result of the market pricing in a rate hike. A part of the rally is the anticipation of future rate hikes in 2017, but I suspect a big part of it is attributed to the forecast of a rate hike in December. So, let's think about how the market might react after Wednesday's (12/13) FOMC monetary policy announcement and economic projections.December FOMC Preview (seeking alpha)USD/JPY Daily Chart 12/13(click to enlarge)Bearish Divergence Doesn't Matter:- There is a 3-point bearish divergence in the daily chart, but I would not pay too much attention to that except as a reminder that the market is tentative ahead of the Fed decision. - A bullish market can stay in overbought condition for a period of time, especially when the market is pricing in rate hikes. Anticipating a "No-Hike Situation":- Now, I think USD/JPY could be volatility down to 112 without triggering a bearish market. - So, even if the Fed does not raise the interest rate, as long as it convinces the market it will do so early in 2017, the USD/JPY would likely have a limited retreat. - If there is increased uncertainty of when the next rate hike will be, then I would have a stronger bearish outlook for USD/JPY. Anticipating a Rate-Hike:- The consensus is that there will be a rate hike. - There is such a strong agreement out there that I believe the rate hike is pretty much priced in.- Which means, if there is a rate hike, the focus is on what's next?- If the FOMC provides strong 2017 economic projections, maybe USD/JPY can make another strong push.- Otherwise, even after a rate hike, I think the rally in USD/JPY could fizzle.