EUR/JPY dropped further to as low as 109.48 last week before turning sideway. The break of 110.69 low suggests that recent decline from 127.88 has resumed. Hence, while more sideway trading might be seen initially this week, we'd expect upside to be limited by 115.47 resistance and bring fall resumption. Below 109.48 will target 61.8% projection of 169.96 to 112.10 from 139.21 at 103.45 next. Nevertheless, break of 115.47 minor resistance will argue that a short term bottom is formed with bullish convergence condition in 4 hours MACD and RSI. In such case, stronger rebound should be seen, possibly towards 122.27 resistance.
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 downside 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.