EUR/JPY dipped to as low as 122.35 last week but rebounded strongly since then. Nevertheless, the cross faced strong resistance ahead of 126.28 and weakened again before the week closed. Near term outlook is mixed and we'll stay neutral first. On the downside, break of 122.35 minor support will reaffirm the case that choppy recovery from 119.64 is merely a correction in the larger decline and has completed at 127.88 already. In such case, intraday bias will be flipped back to the downside for a retest on 119.64 low first. On the upside, however, break of 126.28 resistance will suggest that the fall from 127.88 has completed and is merely a correction to rebound from 119.64. In such case, intraday bias will be flipped back to the upside for another high above 127.88.
In the bigger picture, price actions from 112.10 are treated as correction to long term down trend from 2008 high of 169.96, no doubt. Question is whether such correction is completed at 139.21 already or another rise would still be seen before the correction concludes. The momentum of the rise from 119.64 was not strong enough to confirm the bullish case yet and we'll stay neutral. On the upside, another rise above 127.88 will reaffirm the bullish case that rise from 112.10 is resuming for another high above 139.21. On the downside, break of 121.05 support, however, will revive that case that EUR/JPY has already topped out in medium term at 139.21 and will pave the wave for another low below 112.10 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. Fall from 169.96 should develop into a three wave correction with first wave completed at 112.10. Second wave from 118.10 might still be in progress but after all, we'd expect another long term fall to 118.10 and beyond after the third wave starts.