EUR/JPY dipped mildly last week but stayed in range of 120.90/124.08. Outlook is unchanged and initial bias stays neutral this week first. Further rally is still in favor as long as 120.90 support holds. Above 124.08 will target 126.09 key resistance next. As rise from 109.20 is still seen as a corrective pattern, we’d be cautious on topping around 126.09. Meanwhile, break of 120.90 will indicate short term topping and turn bias to the downside for 118.45 resistance turned support and below.
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. Sustained trading below 55 day EMA will pave the way to retest 109.20.
In the long term picture, current medium term decline from 149.76 is seen as part of a long term sideway pattern from 88.96. Decisive break of 126.09 will indicate that such decline is completed and EUR/JPY has started another medium term rally already.