EUR/JPY stayed in sideway trading below 99.18 temporary top last week as consolidation continued. Initial bias remains neutral this week. As noted before, EUR/JPY is staying comfortably inside a near term rising channel and thus, further rally is still expected. Above 99.18 will target 38.2% retracement of 111.43 to 94.11 at 110.72 next. On the downside, break of the channel support (now at 97.61), however, will indicate that such rebound has completed and will flip bias back to the downside for 95.71 support for confirmation
In the bigger picture, there is no clear sign of reversal yet and the down trend from 2008 high of 169.96 could extend further lower to 90 psychological level. However, as we're favoring the case that pattern from 139.21 is a falling wedge with bullish convergence condition in weekly MACD. Fall from 111.43 should be the last leg in such pattern. Hence, we'll expect strong support above 88.96 to contain downside, form a major bottom and bring reversal. So, focus will remain on reversal signal. Meanwhile, break of 101.62 resistance will be an early sign of medium term bottoming and will turn focus back to 111.43 key resistance for confirmation.
In the long term picture, the down trend from 169.96 is viewed as a corrective move even though it's very deep comparing to the rise from 88.96 (00 low). It could either be a correction or part of a consolidation pattern but that's not too relevant as the range of 88.96/169.96 is so large. The relevant point is that we don't anticipate a break of 88.96 low. And hence, reversal should be around the corner.