GBP/JPY’s decline from 139.73 short term top extended to as low as 131.93 last week. Current development suggests that corrective rebound from 123.94 has completed with three waves up to 139.73. Initial bias remains on the downside this week for 129.27 support. Firm break there will confirm this bearish case and pave the way to retest 123.94 low. On the upside, break of 136.34 minor resistance is needed to indicate completion of the fall. Otherwise, further decline is expected in case of recovery.
In the bigger picture, we’re seeing price actions from 122.75 (2016 low) are seen as a sideway consolidation pattern. As long as 147.95 resistance holds, an eventual downside breakout remains in favor. However, firm break of 147.95 will raise the chance of long term bullish reversal. Focus will then be turned to 156.59 resistance for confirmation.
In the longer term picture, repeated rejection by 55 month EMA indicate long term bearishness in the cross. Down trend from 251.09 (2007 high) should eventually resume through 122.75 to 116.83 (2011 low) and below. However, sustained break of 55 month EMA (now at 145.07) will dampen this view and could open up further rise to 195.86 (2015 high).
