EUR/JPY's rebound from 110.69 extended further to as high as 122.27 last week but failed to sustain above 4 hours 55 EMA, reversed and fell sharply. Initial bias remains on the downside this week and retest of 110.69 low should be seen. However, break here is needed to confirm fall resumption. Otherwise, more consolidations would be seen first. On the upside, above 116.55 minor resistance will flip intraday bias back to the upside and bring another rise as correction from 110.69 extends.
In the bigger picture, fall from 139.21 is treated as resumption of long term down trend from 2007 high of 169.96 and should target 61.8% projection of 169.96 to 112.10 from 139.21 at 103.45 which is close to 100 psychological level. Though, we'd expect strong support between 2000 low of 88.96 and 100 psychological level to contain down side and bring reversal. On the upside, break of 127.88 resistance is needed to be the first signal of bottoming. Otherwise, outlook will remain bearish.
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. The third falling leg is now in progress but would be contained above 88.96 key support level. We'll hold on this this view unless fall from 169.96 shows sign of acceleration.