EUR/JPY’s corrective fall extended lower to 119.24 last week, but recovered strongly ahead of 119.11 support. Initial bias remains neutral this week first. We’d still expect downside to be contained by 119.11 to bring rise resumption. On the upside, break of 120.63 minor resistance will turn bias to the upside for 121.46 first. Break will resume whole rise from 115.86 to 123.35 structural resistance. However, firm break of 119.11 will argue that rise from 115.86 has completed. Intraday bias will be turned to the downside for 117.07 support.
In the bigger picture, a medium term bottom should be formed at 115.86, on bullish convergence condition in daily MACD, ahead of 114.84 support. Decisive of 120.78 support turned resistance will affirm this case and bring further rise to falling channel resistance (now at 125.32). Reactions from there would decide whether the medium term trend has reversed. For now, further rise is expected as long as 117.07 support 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. This falling leg would target 109.48 (2016 low). With EUR/JPY staying below 55 month EMA (now at 125.93), this is the preferred case.
