In our last analysis on EURJPY we warned that a break out of the bullish channel was a bearish sign and the start of a bigger correction lower. We also mentioned that a bounce towards 132 in order to back test the break out of the bullish channel, was justified and last week this is what we witnessed. There are signs of a rejection and this means that a new downward move is coming.

Blue lines -Fibonacci retracement

EURJPY first target remains at the 38% Fibonacci retracement at 129.25. Price today is showing reversal and rejection signs as it approached the lower channel boundary. Having broken the bullish channel downwards, this back test of 132 is of high importance. Support is found at recent low of 130. Resistance is at 132.65. Failure to hold above 130 will open the way fora move towards 129.25 or 126.50. A break above 132.65 will be a bullish sign a could bring price closer to 135.