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

Daily Pivots: (S1) 119.95; (P) 120.31; (R1) 120.85

GBP/JPY's rebound from 118.82 extends further today and at this point stronger rise could still be seen. But such rebound is treated as a correction only and hence, upside should be limited by 124.64 resistance and bring fall resumption eventually. Below 120.64 minor support should flip bias to the downside and send GBP/JPY through 118.82 to 116.83/117.29 support zone next.

In the bigger picture, the corrective structure of the rebound from 116.83 to 133.48 indicates that downtrend from 2007 high of 251.09 is not finished yet. Break of 116.83 will resume such down trend and target 110 psychological level first. Break will pave the way to the more important 100 level and possibly below. On the upside, break of 133.48 is needed to indicate medium-term reversal. Otherwise, we'll stay bearish even in case of strong recovery.
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EUR/JPY Daily Outlook

Daily Pivots: (S1) 97.26; (P) 97.80; (R1) 98.56

EUR/JPY's recovery from 95.64 extended further and breached mentioned 4 hours 55 EMA. While further rise cannot be ruled out, we'd continue to expect strong resistance from 100.20 resistance (38.2% retracement of 108.00 to 95.64 at 100.36) to limit upside and bring fall resumption. Below 97.04 should flip bias back to the downside and send EUR/JPY through 95.64 to next projection level at 95.18 and then 90 psychological level.

In the bigger picture, break of 97.03 support last week confirmed resumption of the larger down trend from 2008 high of 169.96. Current fall could target 61.8% projection of 123.31 to 97.03 from 111.43 at 95.18 and possibly further 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 below 95.18 to contain downside, form a major bottom and bring reversal. So, focus will be on reversal signal below 95.18.
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