Cross-Eyeing: EURJPY

Let me go out on a limb here and say that a potential inverted head and shoulders pattern is forming on the EURJPY! I'm looking to go long on the pair once it hits the right shoulder of the formation. Moreover, that price level lines up nicely with the 61.8% Fibonacci retracement level. With stochastics at oversold territory, would we see the pair bounce up to correct itself once my buy order gets triggered?

On the fundamental side, it seems that concerns about Greece debt resurfaced yesterday. Apparently, Germany and France don't want to help bail out Greece, as they believe that the €4.8 billion in budget cuts are enough. I think that the markets are keying in on this issue, which may lead to some bearish sentiment towards the euro, which is exactly what I'm looking for since I've got a limit order way below the current market price.

There are a couple of reasons why I believe we could see another up move in the EURJPY. First of all, we've saw signs of life from the euro last week, when it made a nice rally on increased risk appetite on Friday. Yesterday's down move may simply be a reaction to the Greece news, and euro bulls may see this as an opportunity to get a better price for bottom picking.

Secondly, news from Japan emerged regarding potential currency intervention by the Bank of Japan. The yen has been on a rise this year, which is not what the Japanese government wants. The BOJ has been notorious for intervening in the markets in the past, because a weak yen leads to increased demand in Japanese exports.

Looking at BabyPips.com's economic calendar, the BOJ will actually be releasing its monetary policy meeting tomorrow. I wouldn't be surprised if we see some verbal intervention by BOJ officials in an attempt to weaken the yen.

Anyway, I will have two profit targets on this trade. I placed the first one at 125.00, last week's high and the second one at 127.00, a broken major support level. In order to give my trade some room to breathe, I placed my stop just a couple of pips below this year's low.

Again, here's what I'm going to do:

Long EURJPY at 121.80, pt1 at 125.00, pt2 at 127.00, stop at 119.50