GBP/JPY dropped to 133.85 last week but recovered since then. As a temporary was formed, initial bias is neutral this week for some consolidations first. But upside of recovery should be limited by 136.05 resistance to bring fall resumption. Break of 133.85 will extend the decline from 148.87 to retest 131.51 low. Though, break of 136.05 will indicate short term bottoming and bring stronger rebound to 137.78 resistance.
In the bigger picture, medium term fall from 156.59 (2018 high) is still in progress. Break of 131.51 will target 122.36 (2016 low). Structure of such decline is corrective looking so far, arguing that it’s just the second leg of consolidation from 122.36. Thus, we’d expect strong support from 122.36 to contain downside to bring reversal.
In the longer term picture, firstly, GBP/JPY’s is kept well below 55 month EMA, keeping outlook bearish. But we’re treating price actions from 122.36 as a corrective pattern. Hence, we’d expect range trading to continue longer. In case of an extension, strong resistance is likely to be seen at 50% retracement of 195.86 (2015 high) to 122.36 at 159.11 to limit upside. However, break of 122.26 will put 116.83 (2011 low) back into focus.