GPB/JPY And EUR/JPY Daily Outlook: July 6, 2012

Daily Pivots: (S1) 123.64; (P) 124.25; (R1) 124.65

Intraday bias in GBP/JPY remains neural for the moment with focus back on 122.86 minor support. Break there will indicate that corrective rise from 118.82 has completed and should flip bias back to the downside for retesting this low. But before there, a rise from 118.82 could still continue higher. Break of 125.47 minor resistance should send GBP/JPY through 125.82 to 127.10 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 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="938" height="651">
EUR/JPY Daily Outlook

Daily Pivots: (S1) 98.42; (P) 99.38; (R1) 99.97

Intraday bias in EUR/JPY remains neutral for the moment with focus on 98.32 minor support. Break there will indicate completion of the corrective rebound from 95.64 and should flip bias back to the downside for retesting this support. But before that, rise form 95.64 could extend higher. Above 101.62 will target 50% retracement of 111.43 to 95.64 at 103.53 and above.

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.