GBP/JPY recovery strongly after dipping to 136.44 but upside is limited by 142.16 support turned resistance so far. Initial bias stays neutral this week first. Firm break of 142.16 will indicate completion of the fall from 148.42. More importantly, this will suggest that such decline is merely a three wave correction and the rise from 122.36 isn’t completed. In such case, intraday bias will be turned to the upside for 148.42 and then 150.42 fibonacci level. Meanwhile, below 136.44 will target 61.8% retracement of 122.36 to 148.42 at 132.31 and below.
In the bigger picture, price actions from 122.36 medium term bottom are seen as developing into a corrective pattern. Upside is so far limited below 38.2% retracement of 195.86 to 122.36 at 150.42 for setting the medium term range. At this point, we don’t expect a break of 122.36 in near term and the corrective pattern would extend for a while. Though, sustained break of 150.42 will target 61.8% retracement at 167.78.
In the longer term picture, while price actions from 122.36 would develop into a medium term correction, fall from 195.86 is still seen as resuming the down trend from 251.09 (2007 high). Hence, after the correction from 122.36 completes we’d expect another fall through 116.83 low.