EUR/JPY dropped sharply to as low as 129.02 last week but rebounded ahead of 100% projection of 138.70 to 132.17 from 135.47 at 128.94. The strengthen of the rebound form 120.02 and mild bullish convergence conditions in 4 hours MACD and RSI argues that a short term bottom is in place. Initial bias is mildly on the upside this week and further rise might be seen to 132.01 resistance first. Nevertheless, we'd expect upside to be limited well below 135.47 resistance and bring fall resumption. On the downside, though, break of 129.02 is needed to confirm decline resumption, otherwise, more sideway trading would be seen first.
In the bigger picture, we're still favoring the case that medium term rebound from 112.10 has completed at 139.21 already, with with bearish divergence condition in daily MACD and RSI, after failing to sustain above 55 weeks EMA. Break of 127.08 will confirm this case and target a retest of 112.10 low next. Also that price actions from 113.63 are treated as consolidation to long term decline from 169.96 only. Break of 127.08 will also argue that such consolidation has completed and indicates that the long term down trend is resuming too. We'll hold on to the bearish view as long as 135.47 resistance holds.
In the long term picture, the three wave corrective structure of the up trend from 88.96 (00 low) to 169.96 suggests that it's merely a correction to the multi decade down trend from 285.56. The impulsive nature of the fall from 169.96 indicates that it's likely resuming the down trend. And hence, such down trend is still expected to resume after completing the current medium term consolidation. In such case, we're looking at the prospect of a retest of 2000 low of 88.96. We'll maintain this view as long as 141.73 cluster resistance (50% retracement of 169.96 to 113.63 at 141.79) holds.