GPB/JPY And EUR/JPY Daily Outlook: October 17, 2012

Daily Pivots: (S1) 126.51; (P) 126.91; (R1) 127.49

GBP/JPY's rebound from 124.72 is still in progress but the development doesn't worry rally resumption yet. Intraday bias remains neutral with focus on 127.79 resistance. Break will indicate 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 case of another fall, strong support should be seen from lower channel line (now at 123.96) to bring rebound.

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.
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EUR/JPY Daily Outlook

Daily Pivots: (S1) 102.16; (P) 102.61; (R1) 103.44

Intraday bias in EUR/JPY remains on the upside for 103.86 resistance. Current development argues that rebound from 94.11 is resuming. Break of 103.86 will confirm this bullish case and target 61.8% retracement of 111.43 to 94.11 at 104.81 and then 111.43 key resistance. On the downside, though, below 101.78 will delay the bullish case and turn bias neutral again for more sideway trading.

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.