The EUR/JPY dropped today and resumed the yesterday’s immense drop. Price is expected to drop further after another breakdown below an uptrend line. Technically, it should drop significantly in the upcoming period after the failure to stabilize above the 134.39 previous high, seems like we had only a false breakout and after the failure to reach and retest a major dynamic resistance level.

I’ve said in the previous days that the rate is still expected to start a larger leg lower because is trapped below some important resistance levels, I’ve said that the rate could come only to retest the resistance levels before will drop again.

The Yen increases versus the Euro even if the Nikkei stock index has continued to increase and to reach fresh new highs. The Euro dropped sharply after the ECB, Draghi’s speech was considered a dovish one, despite that the measures were expected.

I’ve added the JP225’s chart to show you what could happen with the Yen in the upcoming period. The Japanese currency ignored the further increase and increased versus the Euro as the fundamental factors were stronger. Nikkei is almost to reach the lower median line (LML) of the major ascending pitchfork, where he may find resistance again. Technically, only another drop will force the Yen to appreciate, but the Euro was demolished by ECB.

The price dropped after the yesterday’s breakdown below the outside sliding line (SL) and below the uptrend line (downside line of the Rising Wedge pattern). Remains to see if will come back to retest the broken level or will continue to drop towards the upper median line (UML) of the major ascending pitchfork. Support can be found at the 131.65 former low, but most likely will ignore this level and will drop further.

A larger drop will be confirmed only by a valid breakdown below the upper median line (UML) of the major ascending pitchfork, technically is expected to breakdown below this downside obstacle after the failure to retest the median line (ml) of the blue ascending pitchfork.