GBP/JPY’s down trend extended to as low as 126.96 last week. Initial bias stays on the downside this week for 122.36 low first. We’d be cautious on bottoming around there. On the upside, break of 130.06 resistance is needed to be the first sign of short term bottoming. Otherwise, outlook will remain bearish even in case of recovery.
In the bigger picture, outlook remains clearly bearish with GBP/JPY staying well below 55 week and 55 month EMA. Medium term fall from 156.59 (2018 high) is still in progress. Next target is 122.36 (2016 low). We’d be cautious on bottoming there. But break of 135.66 resistance is needed to be the first sign of reversal. Sustained break of 122.36 will target next key level at 116.83 (2011 low).
In the longer term picture, for now, we’re treating price actions from 122.36 as a corrective pattern that could extend with another rebound. Hence, strong support could be seen at 122.36 to bring rebound. However, sustained break will raise the chance of resuming larger 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.
