GBP/JPY’s fall and break of 137.90 minor support revived that case that corrective rebound from 133.03 has completed 140.70. The pattern from 142.71 should have started the third leg. Initial bias stays on the downside this week for 134.40 support and then 133.03. This will now remain the favored case as long as 140.70 resistance holds.
In the bigger picture, rise from 123.94 is seen as a rising leg of the sideway consolidation pattern from 122.75 (2016 low). 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 143.38) will dampen this view and could open up further rise back to 195.86 (2015 high).
