EUR/JPY’s rebound from 128.94 extended to as high as 132.98 before forming a temporary top there. Initial bias is neutral tis week first. Downside of retreat should be contained above 131.09 minor support to bring another rally. Above 132.89 will target 61.8% retracement of 137.49 to 128.94 at 134.22 and above. For now, we’d expect strong resistance below 137.49 high to complete the rebound from 128.94 to bring another fall. On the downside, below 131.09 will indicate that the rebound is completed and bring retest of 128.94 low.
In the bigger picture, price action from 137.49 medium term top are developing into a corrective pattern. Strong support from 55 week EMA (now at 129.91) suggests that the first leg has completed at 128.94 already. Nonetheless, break of 137.49 is needed to confirm resumption of the rise from 109.03 (2016 low). Otherwise, we’d expect more corrective range trading, with risk of another fall to 38.2% retracement of 109.03 to 137.49 at 126.61 before completion.
In the long term picture, at this point, EUR/JPY is staying in long term sideway pattern. established since 2000. Rise from 109.03 is seen as a leg inside the pattern. As long as 124.08 support holds, further rally is in favor in medium to long term through 149.76 high. However, break of 124.08 could extend the fall through 109.03 low instead.
