EUR/JPY: Despite the latest setbacks after stalling out ahead of key shorter term resistance at 125.25, the outlook for the cross could still be quite constructive with the market potentially in the process of carving out an inverse head & shoulders bottom. Monday’s declines were well propped ahead of 120.00 and the right shoulder could now be in place by 121.00 in favor of some renewed strength back towards neckline resistance by 125.25. A break back above 125.25 would now trigger the formation and ultimately open a measured move extension towards 130.00 over the coming days. Back under 120.00 would however negate recovery prospects.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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