EUR/JPY failed to break through 121.46 resistance last week and extended consolidation from there with another decline. Initial bias remains neutral first. Deeper retreat cannot be ruled out but downside should be contained by 119.11 support. On the upside break of 121.46 will resume the rise from 115.86 to 123.35 resistance next.
In the bigger picture, current development argues that a medium term bottom is formed at 115.86, on bullish convergence condition in daily MACD, ahead of 114.84 support. Decisive of 120.78 support turned resistance will affirm this case and bring further rise to falling channel resistance (now at 125.71). Reactions from there would decide whether the medium term has reversed. For now, further rise is expected as long as 117.07 support holds.
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. This falling leg would target 109.48 (2016 low). With EUR/JPY staying below 55 month EMA (now at 125.93), this is the preferred case.
