Currency Outlook: GPB/JPY And EUR/JPY: August 23, 2013

Daily Pivots: (S1) 153.00; (P) 153.50; (R1) 154.37;

GBP/JPY rose to as high as 154.44 so far today, and intraday bias remains on the upside. Price actions from 147.10 are viewed as a consolidative pattern and as the second leg of the correction from 156.77. Further rally could be seen, and strong resistance should be seen below 156.77 to bring reversal to start the third leg. On the downside below 151.73 will turn bias back to the downside for 147.10/61 support zone.

In the bigger picture, a medium term top is in place at 156.77 on a bearish divergence condition in daily MACD. Deeper pull-back could be seen to 38.2% retracement of 118.82 to 156.77 at 142.27. Strong support would likely be seen at 140.37 to bring a rebound, at least on first attempt. Overall, we'd still expect a whole rise from 116.83 in the medium term bottom to resume later to a 163.05 resistance and above after completing the correction.


GBP/JPY H4" width="600" height="600">
GBP/JPY" width="600" height="600">


EUR/JPY

Daily Pivots: (S1) 130.75; (P) 131.35; (R1) 132.42;

So far today EUR/JPY rose further to as high as 132.34, and the intraday bias remains on the upside. The break of 131.96 resistance suggests that rebound from 124.95 is resuming and current rally would likely break through 132.73 resistance. But, the current price action is viewed as part of the consolidation from 133.80 and thus, we'd expect strong resistance from 133.80 to limit upside and bring another fall to extend the consolidation pattern. On the downside, below 130.28 minor support will turn bias back to the downside for 127.96 support first.

In the bigger picture, current development argues that the medium term up trend from 94.11 has topped out at 133.80 on the bearish divergence condition in daily MACD. Consolidation from there could extend with another fall to target 119.10 cluster support (38.2% retracement of 94.11 to 133.80 at 118.63). Strong support would be seen there, at least on initial attempt. But, a break will target a 61.8% retracement at 109.27. Nonetheless, considering the five wave structure of the rise from 94.11, we'd expect another medium term rally after completing the correction.


EUR/JPY H4" width="600" height="600">
EUR/JPY" width="600" height="600">