EUR/JPY rebounded to 125.93 last week but failed to break through 125.95 resistance. Initial bias remains neutral this week first. On the downside, break of 123.78 support will suggest completion of rebound from 118.62 after rejection by 55 day EMA. Deeper fall would then be seen back to retest 118.62 low. However, decisive break of 125.95 will dampen our bearish view and target 129.25 resistance next.
In the bigger picture, medium term rebound from 109.03 (2016 low) has completed at 137.49 (2018 high) already, with corrective structure. Fall from 137.49 is likely still in progress. Decisive break of 118.62 will target 161.8% projection of 137.49 to 124.61 from 133.12 at 112.28, which is inside 109.03/114.84 support zone. This will remain the favored case as long as 129.25 resistance 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. 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.
