GBP/JPY: Downside Breakout Ahead?

Daily Pivots: (S1) 127.59; (P) 128.58; (R1) 129.17;

Intraday bias in GBP/JPY remains neutral at this point. Retreat should be contained by 127.09 support and bring another rally. Above 129.64 will extend the rise from 118.82 towards 133.48 key resistance. Though, break of 127.09 will turn focus back to 124.72 support instead.

In the bigger picture, at this point, we'd like to maintain that price actions from 116.83 (2011 low) are corrective in nature so far. Rise from 118.82 could be the third leg of the pattern from 116.83 and might target 133.48 and above. After all, the likely scenario is that we'll see more range trading between 116.83 and 140.02 (50% retracement of 163.05 to 116.83 at 139.94) ahead, before an eventual downside breakout. We'll favor this view as long as 140.02 resistance holds.

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EUR/JPY Daily Outlook

Daily Pivots: (S1) 102.46; (P) 103.25; (R1) 103.81;

Consolidation from 104.58 short term top is still in progress and intraday bias remains mildly on the downside for deeper fall. But we'll stay near term bullish as long as 100.14 support holds and expect rise from 94.11 to resume later. Above 104.58 should target 111.43 key resistance.

In the bigger picture, we're favoring the case that whole down trend from 169.96 (3008) has completed at 94.11 already, on bullish convergence condition in weekly MACD. Focus is now on 111.43 key resistance level. Break will confirm this bullish case and bring further medium term rise to 123.31 and above (38.2% retracement of 169.96 to 94.11 at 123.08). And, we'd favor this bullish scenario as long as 100.14 support holds. Though, considering that EUR/JPY can't take out 55 weeks EMA decisively yet, break of 100.14 will favor another low below 94.11 instead.

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