EUR/JPY spiked lower to 118.62 last week but recovered strongly since then. A short term bottom should be in place based on the strength of the rebound. Initial bias is mildly on the upside this week for further rise. On the downside, break of 121.80 minor support will turn bias back to the downside for retesting 118.62 low first. Overall, larger down trend is expected to resume later after the consolidation completes.
In the bigger picture, medium term rebound from 109.03 (2016 low) has completed at 137.49 already, with corrective structure. Fall from 137.39 is seen as a medium term fall, resuming the decline from 149.76 (2014 high). Such decline should break through 109.03 low next. This will remain the preferred case as long as 124.61 support turned resistance holds. Sustained break of 124.61 will mix up the outlook and we’ll reassess on the final structure of the rebound from 118.62.
In the long term picture, EUR/JPY is staying in long term sideway pattern, established since 2000. Fall from 137.49 is seen as a falling leg inside the pattern. It could extend through 109.03 to resume the decline from 149.76 But in that case, we’d expect strong support around 94.11 (2012 low) to bring reversal.
