Basically in both the EUR/JPY and GBP/JPY, we are ready for some corrective rally. However, there is still further downside before some more key support factors come in play. So without confidence for the bullish outlook from the current support, it may be prudent to apply quicker trade management (ie. move stop to lock in profit early), if you are trading into a corrective rallies.

EUR/JPY daily Chart 5/25/2012 7:12AM EDT

EUR/JPY

 The EUR/JPY has been falling sharply and has broken the 100 psychological support. It is now at the 99.50 support pivot established late January. The momentum then was not as bearish as it is now. (The RSI is below 30 now where the RSI was around 50 in the previous time).

Still, we might be developing a bit of a bullish divergence in the daily if we can form a daily bullish candle to show a pivot is forming. However since the bullish outlook is against the trend, it should be limited to first resistance area between 102-102.50.

There is still further room to the downside to the 2012 low near 97.00.

GBP/JPY daily Chart 5/25/2012 7:20AM EDT

GBP/JPY

The GBP/JPY can also be seen in a declining channel though not as steep as the EUR/JPY's. It is however also trading at the channel's support, which is now in coincidence with the 200-day simple moving average. The RSI also shows a possibility of forming a bullish divergence.

The upside should be limited to the 126.50 area as it is against the trend. However a some hopium can trigger further correction and as long as we are within the declining channel, we are still in a bearish mode.

It should be noted that there is another support near 123.50(61.8% rertacement), and the 122.80 support pivot, which was established March in 2011 as support after the Tsunami/Earthquake/Nuclear disaster in Japan. It has since been seen as a pivot. In Oct, Nov, and Dec, 2011, this level has acted as resistance. If might act as support this time around.

We will go into a more detailed discussion of the EUR/JPY as well as other currency, equities, bonds, and commodities markets all week long in our Market Intelligence Briefings. Subscribe Today!

Fan Yang CMT is a trader, educator and a Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.