EUR/JPY edged higher to 122.88 last week but reversed since then. The break of 121.18 support dampened the immediately bullish view. It argues that rebound from 118.23 is completed and the consolidation pattern from 124.08 is extending with another falling leg.
Initial bias is now mildly on the downside this week for 120.01 support. Break will target 118.45 key cluster support level again (38.2% retracement of 109.20 to 124.08 at 118.39). At this point, we'd expect strong support from 118.39/45 to contain downside and bring rebound. On the upside, above 122.24 minor resistance will suggest that fall from 122.88 is merely a pull back. And intraday bias will be turned back to the upside for retesting 124.08 high.
In the bigger picture, we're holding on to the view that medium term rise from 109.20 is still in progress. Focus is on 126.09 key resistance level. Sustained break will confirm completion of the whole decline from 149.76. And rise from 109.20 is of the same degree as the fall from 149.76. In such case, further rally would be seen to 104.04 resistance and possibly above before topping. Meanwhile, rejection from 126.09, or firm break of 118.45 cluster support, will likely extend the fall from 149.76 through 109.20 low.
In the long term picture, medium term decline from 149.76 is seen as part of a long term sideway pattern from 88.96. Decisive break of 126.09 will indicate that such decline is completed and EUR/JPY has started another medium term rally already. Before that, deeper fall is mildly in favor towards 94.11 low. Overall,, long term rang trading will continue.