GPB/JPY And EUR/JPY Outlook: December 7, 2012

Daily Pivots: (S1) 131.89; (P) 132.39; (R1) 132.74

GBP/JPY continues to lose upside momentum ahead of 133.48 key resistance but with 130.45 minor support holds, another rally is still in favor to 133.48 and above. However, break of 130.45 will now argue that a short-term top is at least formed and will turn outlook bearish for a retest on 125.67 support instead.

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. 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="640" height="385">
EUR/JPY Daily Outlook

Daily Pivots: (S1) 106.33; (P) 107.11; (R1) 107.62

The break of 106.85 minor support suggests that a short-term top might be in place at 107.95 in EUR/JPY. More consolidative trading would now be seen in near term. But downside should be contained by 105.27 support and bring another rally. Above 107.95 will extend the rise from 94.11 to 100% projection of 94.11 to 104.58 from 100.32 at 110.79 next, which is close to 111.43 key resistance. Though, break of 105.27 will dampen our bullish view and turn focus back to 100.32 key near-term support instead.

In the bigger picture, we're favoring the case that whole down trend from 169.96 (2008 high) has completed at 94.11 already, on bullish convergence condition in weekly MACD. The sustained break above 55 weeks EMA affirmed this view. Break of 111.43 resistance will confirm this bullish case and bring further medium-term rise to 123.31 (38.2% retracement of 169.96 to 94.11 at 123.08) and above. And, we'd favor this bullish scenario as long as 100.32 support holds.
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EUR/JPY" title="EUR/JPY" width="640" height="385">