GPB/JPY And EUR/JPY Daily Outlook: August 21, 2012

Daily Pivots: (S1) 124.54; (P) 124.78; (R1) 124.97

With 4 hours MACD crossed below signal line, intraday bias in GBP/JPY is turned neutral for some consolidations first. Though, another rally is expected as long as 123.30 minor support holds. Above 125.00 temporary top will target 125.82 resistance first. Break will confirm resumption of rebound from 118.82 and should target 100% projection of 118.82 to 125.82 from 120.82 at 127.82 next. On the downside, though, below 123.30 minor support will mix up the near-term outlook again.

In the bigger picture, at this point, we'd like to maintain that price actions from 116.83 are corrective in nature so far. Rise from 118.82 could be the third leg of the pattern from 116.83 and might target 113.48 and above. But this is far from being certain. 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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GBP/JPY" title="GBP/JPY" width="910" height="660">
EUR/JPY Daily Outlook

Daily Pivots: (S1) 97.73; (P) 98.04; (R1) 98.35

With 4 hours MACD crossed below signal line, intraday bias in EUR/JPY is turned neutral first. Another rise remains mildly in favor with 95.71 support intact. Above 98.40 minor resistance will turn bias back to the upside for 38.2% retracement of 111.43 to 94.11 at 110.72 next. However, break of 95.71 will indicate completion of such choppy rebound and argue that fall from 114.34 is resuming for another low below 94.11.

In the bigger picture, there is no clear sign of reversal yet and the downtrend from 2008 high of 169.96 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. Meanwhile, break of 101.62 resistance will be an early sign of medium-term bottoming and will turn focus back to 111.43 key resistance for confirmation.
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EUR/JPY" title="EUR/JPY" width="910" height="660">