GPB/JPY And EUR/JPY Daily Outlook: December 20, 2012

Daily Pivots: (S1) 136.61; (P) 137.23; (R1) 137.71

A temporary top is in place at 137.86 in GBP/JPY and intraday bias has turned neutral. Some consolidations could be seen but downside of retreat should be contained above 132.90 support and bring another rally. Above 137.86 will target 140.02 key resistance level.

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 is still in progress. 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. Nonetheless, a sustained break of 140.02 will indicate that rise from 116.83 is at least a move at the same degree as fall from 163.05 and thus a stronger medium-term rise would then be seen back to this level.
GBP/JPY H4" title="GBP/JPY H4" width="1594" height="745">
GBP/JPY" title="GBP/JPY" width="1594" height="745">
EUR/JPY Daily Outlook

Daily Pivots: (S1) 110.65; (P) 111.06; (R1) 111.79

A temporary top is in place at 112.49 in EUR/JPY and intraday bias is turned neutral for the moment. Below 110.36 will bring deeper retreat but downside should be contained above 107.95 resistance turned support and bring another rally. Prior break of 111.43 resistance has larger bullish implication. Above 112.49 will target 161.8% projection of 94.11 to 104.58 from 100.32 at 117.26.

In the bigger picture, we're favoring the case that the whole downtrend from 169.96 (2008 high) has completed at 94.11 already, on bullish convergence condition in weekly MACD. The sustained break above 55 weeks EMA affirmed this view. Sustained trading above of 111.43 resistance will confirm this bullish case and bring further medium-term rise to 123.31 (38.2% retracement of 169.96 to 94.11 at 123.08) and above. And, we'd favor this bullish scenario as long as 104.58 resistance turned support holds.
EUR/JPY H4" title="EUR/JPY H4" width="1594" height="745">
EUR/JPY" title="EUR/JPY" width="1594" height="745">