GPB/JPY And EUR/JPY Daily Outlook: October 5, 2012

Daily Pivots: (S1) 126.44; (P) 126.77; (R1) 127.37

As noted before, the pullback from 128.82 should have finished at 125.34 already. Intraday bias remains mildly on the upside for a test on 128.82 first. Break will confirm resumption of whole rally from 118.82 for 133.48 resistance next. On the downside, though, below 126.14 minor support will probably flip bias back to the downside and extend the pullback from 128.82 through 125.34 support to lower channel support.

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) 101.55; (P) 101.88; (R1) 102.47

As noted before, the pullback from 103.86 should have completed at 99.63 already. Intraday bias remains mildly on the upside for the moment and current rebound should target a test on 103.86 first. Break will confirm resumption of recent recent rally from 94.11. On the downside, below 101.25 minor support will turn bias back to the downside and would probably bring deeper fall through 99.63 to 97.98/99.18 support zone.

In the bigger picture, we're favoring the case that whole downtrend from 169.96 (3008) has completed at 99.11 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 99.52 support holds. Though, considering that EUR/JPY can't take out 55 weeks EMA decisively yet, break of 99.52 will favor another low below 94.11 instead.
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