EUR/JPY dropped to as low as 122.48 last week but formed temporary low there and recovered. Initial bias is neutral this week for some consolidations first. Current development suggests that rebound from 118.62 has completed at 127.50 already. Hence, upside of recovery should be limited by 124.09/125.29 resistance zone to bring fall resumption. On the downside, break of 122.48 will target retest of 118.62 low.
In the bigger picture, current development argues that rebound from 118.62 is merely a correction and has completed at 127.50. EUR/JPY is staying in long term falling channel from 137.49 (2018 high). Decisive break of 118.62 will confirm resumption of this medium term fall and target 109.20 low. For now, this will be the favored case as long as 125.23 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. Break of 118.62 will extend this falling leg through 109.03 low. On the upside, break of 133.12 resistance bring retest of 149.76 (2014 high).
