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EUR/JPY has recovered strongly after holding as expected the “neckline” to its “head & shoulders” base and 55-day average at 125.37/11 and above 126.54 should confirm the corrective setback is over, according to the Credit Suisse analyst team.

Key quotes

“EUR/JPY has seen its expected recovery from the ‘neckline’ to the existing large ‘head & shoulders’ base and rising 55 -day average, seen starting at 125.37 and stretching down to 125.11, but with strength from here also capped as looked for at the ‘neckline’ to the top and price resistance at 126.22/54.” 

“Above 126.22/54 remains needed to suggest the worst of the setback has been seen, clearing the way for a resumption of the core uptrend for strength back to retest 127.51/52 and eventually our 128.67/70 main objective.” 

“Support moves to 125.85 initially, then 125.47/37. A close below 125.11/09 would raise the prospect of a more serious downturn with support seen next at the potential uptrend from May at 124.90.”