GBP/JPY’s decline accelerated to as low as 129.07 last week. The break of 131.51 support confirmed resumption of whole decline form 156.69. Initial bias stays on the downside this week for 122.36 low as next target. We’d be cautious on bottoming around there. On the upside, above 131.61 minor resistance will turn intraday bias neutral and bring consolidations first. But recovery should be limited below 135.66 resistance to bring fall resumption.
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.
