GPB/JPY And EUR/JPY Daily Outlook: July 18, 2012

Daily Pivots: (S1) 123.19; (P) 123.53; (R1) 124.09

Intraday bias in GBP/JPY remains neutral with focus on 124.04 minor resistance. Break there will argue that rebound from 118.82 is going to extend for another high above 125.82 before completion. Though, as long as 124.04 holds, fall from 125.82 could extend lower and below 122.03 will target a test on 118.82 first.

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 sideway 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) 96.61; (P) 96.99; (R1) 97.58

With 98.13 minor resistance intact, deeper decline is still expected in EUR/JPY for a test on 95.64 low. 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. However, note that break of 98.13 resistance will 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 a 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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