GBP/JPY’s decline from 148.09 extended to as low as 142.11 last week. Initial bias stays on the downside this week for 61.8% retracement of 135.58 to 148.09 at 140.35. At this point, we’d still expect rebound from 122.36 to resume later. Hence, we’d look for strong support below 140.35 to contain downside and bring rebound. On the upside, above 145.43 resistance will turn bias back to the upside for retesting 148.09 first.
In the bigger picture, rise from 122.36 medium term bottom is still expected to extend to of 195.86 to 122.36 at 150.42. And decisive break there could pave the way to 61.8% retracement at 167.78.. However, as the cross is starting to lose upside momentum, rejection below 150.42 and break of 135.58 support will indicate reversal and bring deeper fall back to retest 122.36 instead.
In the longer term picture, based on the impulsive structure of the decline from 195.86 to 122.36, such fall should not be completed yet. But we will now pay close attention to the structure of the rise from 122.36 to determine whether it’s a corrective move, or an impulsive move. That would decide whether a break of 116.83 low would be seen.
