GPB/JPY And EUR/JPY Daily Outlook: September 7, 2012

Daily Pivots: (S1) 124.88; (P) 125.38; (R1) 126.14

GBP/JPY rose to as high as 125.88 so far the the break of 125.82 resistance confirmed resumption of whole rebound from 118.82. Intraday bias is back on the upside and further rise should be seen to 100% projection of 118.82 to 125.82 from 120.82 at 127.82 next. On the downside, break of 123.69 support is needed to indicate short term topping. Otherwise, we'll stay bullish even in case of retreat.

In the bigger picture, at this point, we'd like to maintain that price actions from 116.83 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) 98.97; (P) 99.38; (R1) 100.03

Intraday bias in EUR/JPY remains on the upside for the moment. Rebound from 94.11 has just resumed and should now target 38.2% retracement of 111.43 to 94.11 at 110.72 next. On the downside, break of 97.98 minor support is needed to signal reversal. Otherwise, we'll stay bullish even in case of retreat.

In the bigger picture, there is no clear sign of reversal yet and the down trend from 2008 high of 169.96 could extend further lower 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 above 88.96 to contain downside, form a major bottom and bring reversal. So, focus will remain on reversal signal. Meanwhile, break of 101.62 resistance will be an early sign of medium term bottoming and will turn focus back to 111.43 key resistance for confirmation.
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