EUR/JPY’s decline from 131.97 extended last week and the development suggested that rebound from 124.61 has completed with three waves up to 131.97 already. Intraday bias stays on the downside this week for 127.13 support next. Break will confirm this case and target a test on 124.61 low. On the upside, though, above 130.25 will bring retest of 131.97 instead.
In the bigger picture, for now, medium outlook remains cautiously bullish. the three wave structure of the fall from 137.49 to 124.61 argues that it’s a correction. Also, 124.08 key resistance turned support was defended. Break of 1`33.47 resistance will affirm the bullish case that rise from 109.03 (2016 low) is still in progress for another high above 137.49. And this will remain the favored case as long as 127.13 support holds.
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.