EUR/JPY retreated further away from 114.00 short term top last week and reached as low as 110.77 so far before recovering. Such pull back might continue to 100% projection at 110.31. But still, we'd expect downside to be contained by 109.56 cluster support (61.8% retracement of 106.81 to 114.00 at 109.55) and bring rally resumption. The broader outlook remains unchanged that rise from 106.81 is the third leg of the consolidation pattern from 105.42. Above, 112.90 will flip intraday bias back to the upside. Break of 114.00 will target 115.65 and then 100% projection of 105.42 to 115.65 from 106.81 at 117.04.

In the bigger picture, price actions from 105.42 are treated as medium term consolidations to fall from 139.21. Current development suggests that rise from 106.81 is the third leg of such consolidations and should now be targeting 115.65 resistance and above. Though, we'd expect strong resistance at 38.2% retracement of 139.21 to 105.42 at 118.33 to limit upside and bring down trend resumption. On the downside, below 109.56 support, though, will turn focus back to 105.42 low instead.

In the long term picture, up trend from 88.96 (00 low) has completed at 169.96 and made a long term top there. Based on the five wave structure of the rise from 88.96 to 169.96, we're favoring that fall from 169.96 is corrective in nature. It should develop into a three wave correction with first wave completed at 112.10, second wave completed at 139.21. There is no confirmation that the third wave is finished and such decline might still continue. But EUR/JPY would be contained above 88.96 key support level. We'll hold on to this view unless fall from 169.96 shows sign of acceleration.

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