Technical outlook and chart setups:
The EUR/JPY pair is testing major resistance at 125.75/95 levels at this moment, and should be looking to reverse lower from here. Please note that it is trading around the resistance of the Fibonacci 0.618 retracement of the drop between 128.25 and 121.70 levels respectively. The wave structure also indicated that the earlier drop was impulsive (5 waves). The recent rally from 121.70 levels unfolded into 3 waves, which are corrective in nature. Unless prices rally towards 128.25 levels from here, it is most likely that wave could be lower from here. It is hence recommended to initiate short positions now, with risk at 128.00 levels. Immediate resistance is seen at 128.25 levels, while support is through 124.75 levels respectively.
Trading recommendations:
Remain short now, stop at 128.00/25, target is open.
Good luck!
