The pair has plunged aggressively today and has resumed the Friday’s bearish candle. It seems too heavy to be stopped on the short term after a false breakout above a dynamic resistance level. EUR/JPY is developing a Rising Wedge pattern, but this is far from being confirmed.

The current drop could be only temporary as the Nikkei’s stock index could drop only to retest a support level before will jump much higher.

I want to remind you that the perspective remains bullish on the EUR/JPY  despite the minor decrease. The European currency drop versus all its rivals, not only versus the Yen.

The Yen was punished by the Japanese data as well, the Flash Manufacturing PMI increased from 52.2 points to 53.4 points, but failed to reach the 53.4 estimate. The Yen wasn’t inspired by the BOJ Gov Kuroda’s speech in the morning.

The JP225 is trading in the red right now and could decrease further in the upcoming days after the impressive rally. It could come down to test and retest the 20058 horizontal support (resistance turned into support) before will climb higher again. Technically is still expected to climb much higher on the short term after the breakout above the 20320 previous high, but a minor drop is natural after the amazing momentum.

You can see that the price failed to stabilize above the 150% Fibonacci line (ascending dotted line)  and now is trading below the outside sliding line (ascending dotted line). EUR/JPY is approaching the black uptrend  as well, this line represents the downside line of the potential Rising Wedge pattern. Price drops after the failure to reach and retest the red uptrend line.

However, you should know that perspective remains bullish on the Daily chart despite the minor drop, a broader drop will appear only if the rate will breakdown from the Rising Wedge and below the upper median line (UML) of the major ascending pitchfork. A further increase will be confirmed after a valid breakout above the 150% Fibonacci line.