Daily Pivots: (S1) 118.85; (P) 119.36; (R1) 120.13; More…
EUR/JPY’s correction fall from 124.08 resumed and dived to as low as 118.59. At this point, we’d still expect strong support from 118.45 cluster support (38.2% retracement of 109.20 to 124.08 at 118.39) to contain downside and bring rebound. Break of 121.32 resistance will confirm that the correction has completed and turn bias back to the upside for 123.30/124.08 resistance zone. However, sustained trading below 118.45 will invalidate our view and bring deeper fall to 114.88 fibonacci level.
In the bigger picture, price actions from 109.20 medium term bottom are seen as part of a medium term corrective pattern from 149.76. There is prospect of another rise towards 126.09 key resistance level before completion. But even in that case, we’d expect strong resistance between 126.09 and 141.04 to limit upside, at least on first attempt. Nonetheless, decisive break of 118.45 cluster support (38.2% retracement of 109.20 to 124.08 at 118.39) will argue that rise from 109.20 is completed and turn outlook bearish for 61.8% retracement at 114.88 and below.
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