GPB/JPY And EUR/JPY Daily Outlook: August 16, 2012

Daily Pivots: (S1) 123.40; (P) 123.71; (R1) 124.14

GBP/JPY rises further to 124.34 so far and intraday bias remains on the upside. As noted before, the choppy correction from 125.82 is already completed. And, rebound from 118.82 is finally resuming. Further rise should be seen to 125.82 resistance next and break will confirm this bullish case. However, a break below 122.40 minor support will dampen this bullish case and turn outlook mixed again.

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="472">
EUR/JPY Daily Outlook

Daily Pivots: (S1) 96.55; (P) 96.99; (R1) 97.44

EUR/JPY is still bounded in range below 97.81 and 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, 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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