EUR/JPY continued to stay in the consolidation pattern from 124.08 last week and outlook is unchanged. Initial bias remains neutral this week first. Deeper fall cannot be ruled out yet. On the downside, below 120.54 will target 118.45 cluster support (38.2% retracement of 109.20 to 124.08 at 118.39). In that case, we’d expect strong support from there to bring rebound. On the upside, break of 124.08 will extend the larger rally from 109.20 to 126.09 key resistance next.
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. Nonetheless, decisive break of 118.45 cluster support (38.2% retracement of 109.20 to 124.08 at 118.39) will argue that rise from 109.20 is completed and turn outlook bearish for 61.8% retracement at 114.88 and below.
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.