GPB/JPY And EUR/JPY Daily Outlook: October 19, 2012

Daily Pivots: (S1) 126.78; (P) 127.50; (R1) 127.88

GBP/JPY rose to 128.20 but lacked follow through buying. The cross then retreated with 4 hours MACD crossed below signal line. Intraday bias is turned neutral again. The consolidation pattern from 128.20 might extend further. In case of another fall, downside should be contained by lower channel line (now at 123.98) and bring rebound. Above 128.20 will turn bias back to the upside for 128.82. 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.
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GBP/JPY" title="GBP/JPY" width="569" height="473">
EUR/JPY Daily Outlook

Daily Pivots: (S1) 103.21; (P) 103.67; (R1) 104.05

EUR/JPY broke 103.86 minor support and argues that recent rise from 94.11 is resuming. Upside momentum is not too convincing yet. But intraday bias will stay on the upside as long as 102.90 minor support holds. Further rally should be seen to 61.8% retracement of 111.43 to 94.11 at 104.81 and then 111.43 key resistance. On the downside, though, below 102.90 minor support 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.
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EUR/JPY" title="EUR/JPY" width="569" height="473">