GPB/JPY And EUR/JPY Daily Outlook: August 14, 2012

Daily Pivots: (S1) 122.44; (P) 122.76; (R1) 123.13

GBP/JPY recovers further today but is still limited below 123.77/79 resistance and intraday bias remains neutral. On the upside, break of 123.77/79 resistance will confirm completion of the pull back from 125.82. More importantly, this will argue that whole rebound from 118.82 is resuming for 125.82 and above. On the downside, however, break of 120.82 will extend the decline from 125.82 to retest 118.82 low.

In the bigger picture, there was so far no impulsive upside move after GBP/JPY formed a medium term bottom at 116.83. On the other hand, there was no sustainable selling neither. The development argues that even though there is no clear sign of trend reversal in GBP/JPY, it's more likely engaging in sideway consolidations, which corrects fall from 163.05. That is, we'd probably 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.
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GBP/JPY" title="GBP/JPY" width="736" height="458">
EUR/JPY Daily Outlook

Daily Pivots: (S1) 96.03; (P) 96.47; (R1) 97.00

EUR/JPY's recovery from 95.71 extends today but is still limited below 97.81. Thus, intraday bias remains neutral. Note again that with 94.92 minor support intact, rebound from 94.11 is still in mild favor to continue higher. Above 97.81 will target 100 psychological level and above. However, note that break of 94.92 minor support will firstly indicate completion of rebound form 94.11. Secondly, the corrective structure in turn argues that larger decline from 111.43 is resuming for a new low below 94.11.

In the bigger picture, the down trend from 2008 high of 169.96 is still in progress and could extend further lower to 90 psychological level. However, as we're favoring the case that pattern from 139.21 is a falling wedge with bullish convergence condition in weekly MACD. Fall from 111.43 should be the last leg in such pattern. Hence, we'll expect strong support above 88.96 to contain downside, form a major bottom and bring reversal. So, focus will remain on reversal signal.
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EUR/JPY" title="EUR/JPY" width="736" height="458">