GPB/JPY And EUR/JPY Daily Outlook: July 10, 2012

Daily Pivots: (S1) 123.11; (P) 123.39; (R1) 123.81

Intraday bias in GBP/JPY remains neutral for the moment, with focus on 122.86 minor support. Break there will indicate completion of the corrective rise from 118.82. In such case, bias will be flipped back to the downside for retesting 118.82 low first. On the upside, though, above 125.47 will extend the rebound from 118.82 to 127.10 resistance and above.

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, either. The development argues that even though there is no clear sign of trend reversal in GBP/JPY, it's more likely engaging in sideways consolidations, which corrects a 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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EUR/JPY Daily Outlook

Daily Pivots: (S1) 97.58; (P) 97.86; (R1) 98.24

Intraday bias in EUR/JPY remains on the downside for the moment. As noted before, corrective rise from there should have finished at 101.62 already. Deeper fall is expected to retest 95.64 first. Break will resume the whole decline from 114.43 and should target 61.8% projection of 111.43 to 95.64 from 101.62 at 91.86. On the upside, however, above 98.13 minor resistance will mix up near-term outlook and turn bias neutral again.

In the bigger picture, with 111.43 resistance intact, the downtrend 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 be on reversal signal in case of another decline. Meanwhile, break of 104.61 will be the first signal of reversal while further break of 111.43 should confirm.
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