EUR/JPY surged to as high as 130.26 last week but retreated sharply since then. Initial bias is neutral this week first. Despite breaking 128.94 support turned resistance, the rejection by falling 55 day EMA kept outlook bearish. EUR/JPY is also staying well inside falling channel from 137.49. Hence, break of 127.78 minor support will indicate completion of the rebound. Intraday bias will be turned back to the downside for 124.61 first. Nonetheless, above 130.26 will extend the rebound to 133.47 key near term resistance next.
In the bigger picture, despite rebound strongly ahead of 124.08 resistance turned support, there was no clear follow through buying. Note again that there is bearish divergence in daily MACD. Firm break of 124.08 will confirm trend reversal. That is, whole rise from 109.03 (2016 low) has completed at 137.49 already. In that case, deeper fall should be seen back to 61.8% retracement of 109.03 to 137.49 at 119.90 and below. Nonetheless, decisive break of 133.47 key resistance will likely extend the rise from 109.03 through 137.49 high.
In the long term picture, at this point, EUR/JPY is staying in long term sideway pattern, established since 2000. Rise from 109.03 is seen as a leg inside the pattern. As long as 124.08 support holds, further rally is in favor in medium to long term through 149.76 high. However, break of 124.08 could extend the fall through 109.03 low instead.
