EUR/JPY’s sharp decline last week put focus on 119.99 cluster support (38.2% retracement of 115.86 to 122.65 at 120.05). Considering bearish divergence condition in daily MACD, rebound from 115.86 could have completed at 122.65, ahead of medium term channel resistance. Firm break of 119.99 should confirm and bring deeper fall to 61.8% retracement at 118.45 and below. Nevertheless, strong rebound from current level will retain near term bullishness and turn focus back to 122.69 high.
In the bigger picture, EUR/JPY is still staying in the falling channel established since 137.49 (2018 high). Rise from 115.86 is seen as a corrective rise for the moment. Strong resistance could be seen at falling channel resistance (now at 124.49) to limit upside. However, sustained break of the channel resistance will carry larger bullish implication and target 127.50 key resistance next.
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 125.60), this is the preferred case.