GPB/JPY And EUR/JPY Daily Outlook: August 28, 2012

Daily Pivots: (S1) 124.16; (P) 124.40; (R1) 124.58

GBP/JPY's pull back from 125.51 extends lower today and deeper fall could be seen. But after all, as long as 123.26 minor support holds, further rally is still in favor. Above 124.63 minor resistance will flip bias back to the upside. Decisive break of 125.51/82 resistance zone will confirm resumption of whole rebound from 118.82 and should target 100% projection of 118.82 to 125.82 from 120.82 at 127.82 next. However, note that break of 123.26 will dampen our bullish view and turn focus back to 120.82 support instead.

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 113.48 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.

EUR/JPY Daily Outlook

Daily Pivots: (S1) 98.24; (P) 98.48; (R1) 98.64

Intraday bias in EUR/JPY remains neutral for some more consolidations below 99.18 temporary top. As noted before, the cross is staying comfortably inside a near-term rising channel and thus, further rally is still expected. Above 99.18 will target 38.2% retracement of 111.43 to 94.11 at 110.72 next. On the downside, break of the channel support (now at 97.07), however, will indicate that such rebound has completed and will flip bias back to the downside for 95.71 support for confirmation.

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.