EUR/JPY dropped to as low as 128.78 last week and recovered since then. Initial bias remains neutral this week and some sideway trading might be seen. But after all, we'd still favor the case that rebound from 126.88 has completed at 134.54 already. Hence, we'd expect upside of the consolidations to be limited well below 134.54 and bring fall resumption. Below 128.78 will target 126.88 support next. On the upside, however, break of 134.54 will indicate that rise from 126.88 is still in progress and would target upper end of the medium term range near term 139.21 instead.
In the bigger picture, at this point, EUR/JPY is still bounded in medium term range between 126.88 and 139.21 and outlook remains neutral for the moment. Nevertheless, a break of 126.88 support will revive that case that medium term rebound from 112.10 has completed at 139.21 already. And down trend from 169.96 is resuming. In such case, we'd expect deeper fall to 112.10 and beyond to resume the long term down trend.
In the long term picture, up trend from 88.96 (00 low) has completed at 169.96 and made a long term top there. Subsequent price actions are either developing into resumption of the multi decade down trend from 285.56, or wide range corrective pattern. In either case, upside should be limited well below 169.96 high and we're expecting at least one more medium term fall after the current rise from 112.10 completes. The final structure of the rebound from 112.10 will provide more indication on whether a test on 88.96 low would be seen.
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