The EURJPY correction could continue below the 110.00 level if the pair continues trading within the descending channel starting Dec ’14. That is below the 126.97-128.70 Fibo zones of the bearish leg.
Since the 78.6% Fibo of the upside leg rejected bears, bulls managed to revisit the 50% Fibo at 123.55. There, a false break triggered a pullback.
Having crossed above the TS1 trendline (now resistance), bulls could make another effort to take out the TR1 trendline as the first one failed. That could be followed after a successful retracement, as shown in the chart below.
Despite trading below TS1, the chances of turning higher are good.
The lower line of the ascending channel makes the 119.40 level attractive for both bears and bulls. This is where the 50% Fibo of the breakout leg lies too. However, a deeper retracement can be expected to, near 118.20.
A successful bounce at either of those levels could cause a bullish rally towards the TR1 trendline near/above 124.00-125.00.
In case prices break below 118.00, however, the chances of a decline towards the 115.00 (and perhaps to the longer-term target below 110.00) will increase. This would suggest an earlier-than-expected bearish continuation.