GBP/JPY’s rebound from 126.54 extended higher last week and breached 38.2% retracement of 148.87 to 126.54 at 135.07. Initial bias stays on the upside this week first. Further rise could be seen to 61.8% retracement at 140.33 next. On the downside, break of 132.17 minor support will turn bias back to the downside for retesting 126.54 low instead.
In the bigger picture, consolidation pattern from 122.75 (2016 low) is possibly still in progress. Strong rebound from 126.54 argues that it may be the third leg of the pattern. Further rise could be seen to 148.87/156.59 resistance zone before completion. On the downside, though, sustained break of 122.75 low will extend 116.83 (2011 low).
In the longer term picture, for now, we’re treating price actions from 122.36 as a corrective pattern. Hence, strong support could be seen at 122.36 to bring rebound before the pattern completes. However, sustained break will raise the chance of resuming long term down trend from 251.09 (2007 high). Next downside target will be 61.8% projection of 195.86 to 122.36 from 156.59 at 111.16.