GPB/JPY And EUR/JPY Daily Outlook: October 15, 2012

Daily Pivots: (S1) 125.62; (P) 125.89; (R1) 126.28

GBP/JPY's correction from 128.82 could still be in progress and might extend lower. But in that case, strong support should be seen at lower channel (now at 123.86) to bring rebound. On the upside, above 127.79 will argue that recent rise from 118.82 is ready to resume. In such case, bias will be turned back to the upside for 128.82 first. Break will target 133.48 resistance next.

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 might target 133.48 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.


EUR/JPY Daily Outlook

Daily Pivots: (S1) 101.24; (P) 101.57; (R1) 101.95

EUR/JPY is still staying inside recent converging range and intraday bias remains neutral. Some more sideway trading could be seen. On the upside, above 102.79 will argue that recent rally from 94.11 is finally resuming and will turn bias to the upside for 103.86 first. Break will confirm and target 61.8% retracement of 111.43 to 94.11 at 104.81 and then 111.43 key resistance. On the downside, below 100.14 will bring deeper decline to extend the correction fro 103.86. But we'd expect strong support from 97.98/99.18 support zone to contain downside and complete the consolidations.

In the bigger picture, we're favoring the case that whole downtrend from 169.96 (3008) has completed at 94.11 already, on bullish convergence condition in weekly MACD. Focus is now on 111.43 key resistance level. Break will confirm this bullish case and bring further medium-term rise to 123.31 and above (38.2% retracement of 169.96 to 94.11 at 123.08). And, we'd favor this bullish scenario as long as 97.98 support holds. Though, considering that EUR/JPY can't take out 55 weeks EMA decisively yet, break of 97.98 will favor another low below 94.11 instead.