EUR/JPY dropped to 120.05 last week but formed a temporary low there and recovered. Initial bias remain neutral this week first for some more consolidation. But still, outlook remains bearish as long as 122.32 resistance holds. on the downside, break of 120.05 will resume the decline from 127.50 for retesting 118.62 low. Though, break of 122.32 would indicate short term bottoming and bring stronger rebound to 123.35 resistance and above.
In the bigger picture, down trend from 137.49 is still in progress with the cross staying well inside long term falling channel, and below falling 55 week EMA. 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.
