EUR/JPY edged higher to 125.32 last week and break of 125.09 resistance suggests resumption of rebound from 118.62. Initial bias is now on the upside this week for 55 day EMA (now at 126.43). On the downside, break of 123.78 support is now needed to indicate completion of rebound form 118.62. Otherwise, near term outlook will remain cautiously bullish in case of retreat.
In the bigger picture, medium term rebound from 109.03 (2016 low) has completed at 137.49 already, with corrective structure. Fall from 137.39 is possibly just the second leg of the corrective pattern from 109.03. Break of 133.12 resistance should start the third leg to 137.49 and above. Nevertheless, break of 118.62 will resume the decline from 137.49 for 109.03/114.84 support zone instead.
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. It could extend through 109.03 to resume the decline from 149.76 But in that case, we’d expect strong support around 94.11 (2012 low) to bring reversal.
