EUR/JPY has been trading in a very narrow range 121.12 - 122.18 the last couple of days, but we know that this type of range-trading normally is followed by high volatility. The big question is of cause which way we are going to break out of this range. I'm still looking for one last rally higher to 122.75 followed by renewed weakness down to the ideal corrective target at 117.28. However a break below 121.12 will open for the possibility of a direct decline towards the ideal target and a break below support at 120.36 will confirm this outcome.
We finally saw the daily close below 1.5685, which is the first close below the channel support-line since the low at 1.4966 in early August 2012. This should open for a continuation towards the expanded triangle support-line near 1.5200. The absolute minimum I expect to see is a break below 1.5390, which marked the bottom of wave c. This monster correction seems to come to an end soon, but we are not there yet. Short term we expect support at 1.5727 to protect the upside for the next decline towards support at 1.5593 and at 1.5550.