GBP/JPY Weekly Outlook

GBP/JPY's recovery extended further to 139.33 last week but failed to reversed after hitting mentioned 139.21 cluster resistance (38.2% retracement of 150.68 to 132.13 at 139.21, 61.8% retracement of 143.59 to 132.13 at 139.21). The development argues that choppy rise from 132.13, which is treated as a correction to the larger decline, has completed already. Initial bias is cautiously on the downside this week. Break of 135.18 minor support will affirm this view and bring retest of 132.13 low next. Break will confirm fall resumption to 61.8% projection of 150.68 to 132.13 from 139.33 at 127.86 next.

In the bigger picture, as discussed before, medium term rebound from 118.18, which is correction to the long term down trend from 07 high of 251.90, has completed at 163.05 already. Decline from 163.05 is tentatively treated as resumption of the long term down trend from 2007 high of 251.09 and should target a new low below 118.81. On the upside, decisive break of 143.59 cluster resistance (61.8% retracement of 150.68 to 132.13 at 143.59) is needed to invalidate this view. Otherwise, outlook will remain bearish.

In the longer term picture, fall from 251.09 is treated as resumption of multi decade down trend. Note that the fall from 215.87 is not treated as the fifth wave, but the third wave inside the third wave that started at 241.35. On resumption, the down trend will extend to 61.8% projection of 215.87 to 118.81 from 163.05 at 103.03 next, which is close to 100 psychological support.

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