GPB/JPY And EUR/JPY Daily Outlook: July 16, 2012

Daily Pivots: (S1) 122.51; (P) 123.01; (R1) 123.85

Intraday bias in GBP/JPY remains neutral for the moment. At this point, we're still mildly favoring the case that corrective rebound from 118.82 is finished at 125.82 already, after hitting 55 days EMA. As long as 124.04 minor resistance holds, we'd expect another fall ahead. Below 122.03 will target a test on 118.82 first. Nonetheless, break of 124.04 will in turn argue that rebound from 118.82 is going to extend for another high above 125.82 before completion.

In the bigger picture, there was so far no impulsive upside move after GBP/JPY formed a medium-term bottom at 116.83. On the other hand, there was no sustainable selling neither. The development argues that even though there is no clear sign of trend reversal in GBP/JPY, it's more likely engaging in sideways consolidations, which corrects fall from 163.05. That is, we'd probably 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.
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EUR/JPY Daily Outlook

Daily Pivots: (S1) 96.57; (P) 96.83; (R1) 97.24

While some sideway strading could be seen above 96.42 temporary low, near term outlook in EUR/JPY remains bearish with 98.13 minor resistance intact and further decline is still expected. Below 96.42 will target a test on 95.64 low first. Break will resume the whole decline from 114.43 and should target 61.8% projection of 111.43 to 95.64 from 101.62 at 91.86. Nonetheless, break of 98.13 resistance will now argue that price actions from 95.62 is developing into the three wave consolidation pattern and a test of 101.62 could then be seen before the fall from 111.43 resumes.

In the bigger picture, with 111.43 resistance intact, the down trend from 2008 high of 169.96 is still in progress and 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 be on reversal signal.
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