EUR/JPY technical analysis: Double top on D1 chart

• EUR/JPY has created a double top pattern on the daily chart.
• A breakdown, if confirmed, could fuel a drop to 119.22.

EUR/JPY fell 0.73% on Thursday to register its biggest single-day drop since Aug. 30.

Notably, with Thursday's drop from near 121.50, the pair has carved out a double top bearish reversal pattern with the neckline support at 120.35.

A close below 120.35 would confirm a double top bearish reversal and open the doors for 119.22 (target as per the measured move method).

The outlook would turn bullish if the pair finds acceptance above 121.50. As of writing, the spot is trading largely unchanged on the day at 120.51.

The neckline support will likely come into play in the next few hours if the Caixin China Manufacturing PMI for October, due at 01:45 GMT, prints well below estimates, bolstering fears of a deeper economic slowdown in the world's second-largest economy and triggering a flight to safety. Risk-off usually bodes well for the anti-risk JPY.

Note that Japan's Jibun Bank Manufacturing PMI came weaker-than-expected at 48.5. A below-50 reading indicates contraction. So far, however, Japan's Yen has remained resilient.

Daily chart

Trend: Bearish below 120.35

Technical levels