EUR/JPY Weekly Outlook

EUR/JPY dived to as low as 131.41 last week but once again drew support form medium term rising trend line and recovered. However, note that such recovery is still limited below 135.15 resistance and hence, another fall is still in favor. Below 132.97 minor support will flip intraday bias back to the downside for 131.41 low first. On the upside, break of 135.15 will indicate that fall fro 139.21 has possibly completed and on the other hand, medium term rally may still be in progress. Hence, in such case, further rise should be seen to 139.20 resistance or above.

In the bigger picture, rise from 112.10 is treated as part of the consolidation in the larger down trend form 08 high of 169.96 only. Considering bearish divergence condition in daily MACD and RSI, such rise is tentatively treated as completed at 139.21 already. Break of mentioned trend line support from 112.10 will add much credence to this case. Further break of 124.35 will confirm and bring retest of 112.10 low next. Meanwhile, note that another rise cannot be ruled out for the moment. But upside should be limited by resistance zone of 50% retracement of 169.96 to 112.10 at 141.03 and 61.8% retracement at 147.85 and finally bring reversal.

In the long term picture, the three wave corrective structure of the up trend from 88.97 (00 low) to 169.96 suggests that it's merely a correction to the multi decade down trend from 285.56. The impulsive nature of the fall from 169.96 indicates that it's likely resuming the down trend. And hence, such down trend is still expected to resume after completing the current medium term consolidation. However, note that firm break of 147.85 fibo resistance will also have 55 months EMA (Now at 143.75) firmly taken out and will argue that whole down trend from 169.96 has indeed completed.

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