EUR/JPY dropped to 120.95 last week but recovered ahead of 120.78 support. The development suggests that consolidation from 120.78 is extending with another rise. Initial bias is mildly on the upside this week for 123.18 resistance. Upside should be limited below 123.73 resistance to bring fall resumption eventually. On the downside, firm break of 120.78 will resume the fall from 127.50 and target 118.62 low next.
In the bigger picture, down trend from 137.49 is still in progress with the cross staying inside long term falling channel. Break of 118.62 will extend the fall to 109.48 (2016 low). On the upside, break of 127.50 resistance is needed to be the first sign of medium term reversal. Otherwise, outlook will remain bearish in case of strong rebound.
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. Break of 118.62 will extend this falling leg through 109.48 (2016 low). With EUR/JPY staying below 55 month EMA, this is now the preferred case.
