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Tuesday's FX Outlook

ByActionForex
Published 08/27/2013, 06:47 AM
EUR/JPY
0.35%
GBP/JPY
-0.49%
GBP/JPY
  • Daily Pivots: (S1) 153.09; (P) 153.52; (R1) 153.83;
GBP/JPY drops sharply today and focus is back on 151.73 minor support. Break will suggest that the consolidation from 147.10 has completed. In such case, bias will be back to the downside for 147.10/61 support zone first. Overall outlook is unchanged. Correction from 156.77 is expected to extend further. In case of another rise, strong resistance should be seen below 156.77 to bring reversal to extend the consolidation.

In the bigger picture, a medium term top is in place at 156.77 on bearish divergence condition in daily MACD. Deeper pull back could be seen to 38.2% retracement of 118.82 to 156.77 at 142.27 as consolidation from there extends. Strong support would likely be seen at 140.37 to bring rebound, at least on first attempt. Overall, we'd still expect whole rise from 116.83 medium term bottom to resume later to 163.05 resistance and above after completing the correction.
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EUR/JPY
  • Daily Pivots: (S1) 131.37; (P) 131.84; (R1) 132.14;
Intraday bias in EUR/JPY is turned neutral first with focus back to 130.28 minor support. Break will turn bias back to the downside for 127.96 support first. Break will argue that the choppy rise from 124.95 has completed and will bring deeper fall back to 124.95. Above 132.42 will bring another rally through 132.73 resistance. But as consolidation pattern from 133.80 top is still in progress and strong resistance is expected below 133.80 to bring another fall to extend the consolidation.

In the bigger picture, medium term up trend from 94.11 has topped out at 133.80 on bearish divergence condition in daily MACD. Consolidation from there could extend with another fall to target 119.10 cluster support (38.2% retracement of 94.11 to 133.80 at 118.63). Strong support would be seen there, at least on initial attempt. But, break will target 61.8% retracement at 109.27. Nonetheless, considering the five wave structure of the rise from 94.11, we'd expect another medium term rally after completing the correction.
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