EUR/JPY Weekly Forecast

EUR/JPY's rebound was limited at 136.87 last week and reversed. The three wave structure is inline with the view that it's merely a correction to fall from 139.21 to 131.41 and such correction has likely completed already. Initial bias will remain mildly on the downside this week. Break of 133.36 support will add much credence to this case and target 131.41 low next. On the upside, above 135.44 minor resistance will flip intraday bias back to the upside but after all, we're still expecting the rise from 131.41 to be limited below 139.21 and bring fall resumption. .

In the bigger picture, rise from 112.10 is treated as part of the consolidation in the larger down trend form 08 high of 169.96 only. Considering bearish divergence condition in daily MACD and RSI, such rise is tentatively treated as completed at 139.21 already. Break of trend line support from 112.10 will add much credence to this case. Further break of 124.35 will confirm and bring retest of 112.10 low next. Meanwhile, note that another rise cannot be ruled out for the moment. But upside should be limited by resistance zone of 50% retracement of 169.96 to 112.10 at 141.03 and 61.8% retracement at 147.85 and finally bring reversal.

In the long term picture, the three wave corrective structure of the up trend from 88.97 (00 low) to 169.96 suggests that it's merely a correction to the multi decade down trend from 285.56. The impulsive nature of the fall from 169.96 indicates that it's likely resuming the down trend. And hence, such down trend is still expected to resume after completing the current medium term consolidation. However, note that firm break of 147.85 fibo resistance will also have 55 months EMA (Now at 143.47) firmly taken out and will argue that whole down trend from 169.96 has indeed completed.

Based on ActionForex.com Technical Outlook