GBP/JPY’s strong recovery last week suggests that rebound from 123.94 hasn’t completed yet. Initial bias stays neutral this week first. On the upside, break of 135.74 will target 61.8% retracement of 144.95 to 123.94 at 136.92. We’d look for strong resistance from there to limit upside. But sustained break of 135.74 will pave the way to 144.95 resistance next. On the downside, break of 131.90 will turn bias back to the downside for retesting 123.94 low.
In the bigger picture, price actions from 122.75 (2016 low) are merely a sideway consolidation pattern, which has completed at 147.96. Larger down trend from 195.86 (2015 high) as well as that from 251.09 (2007 high) are possibly resuming. Break of 122.75 should target 61.8% projection of 195.86 to 122.75 from 147.95 at 102.76 next. In any case, outlook will remain bearish as long as 147.95 resistance holds.
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) could be resuming. Break of 116.83 will target 61.8% projection of 195.86 to 122.75 from 147.95 at 102.76 next