EURJPY turned lower since it extended to the 150% FE of CD of a classic AB=CD pattern above the 127 handle.
Somewhat supported by a weak double-top formation and bearish divergence signals on both the MACD and RSI, yen flows ended having cleared the 122 handle so far.
Bears could be eying the 121 handle next as it marks the 78.6% FR of CD. However, a deeper decline would form better opportunities for bulls not only from a price perspective but also from an indicator standpoint as a more effective hidden divergence could ensue at lower levels.
The 1H chart below supports the above scenario from a pattern point of view.
Here we could be spotting an emerging bullish Cypher pattern that carries a similar potential to the higher timeframe. For this pattern to complete, prices must weaken down to the 78.6% FR of XC near 117.
A bullish Cypher requires B to remain between 38% and 62% of A, C between 113% and 141% of AB, and D between 127% and 200% of BC. In addition, D has to end at 78.6% of C.
A decline to the said level could offer buyers a ride to 128, and perhaps even higher. However, A failure to reach the 78.6% FR or break below it would invalidate the Cypher pattern.