GBP/JPY’s rebound from 126.54 resumed last week and accelerated to as high as 137.89. Current development argues that such rise is the third leg of a long term consolidation pattern. Initial bias stays on the upside this week for 61.8% retracement of 148.84 to 126.54 at 140.33. Firm break there will pave the way to 148.87 resistance next. On the downside, below 136.46 minor support will turn intraday bias neutral and bring consolidations first, before staging another rally.
In the bigger picture, consolidation pattern from 122.75 (2016 low) is still in progress with rise from 126.54 as the third leg. Further rise should be seen back to 148.87/156.59 resistance zone. For now, we’d expect strong resistance from there to limit upside. And, this will remain the favored case as long as 130.42 support holds.
In the longer term picture, price actions from 122.75 (2016 low) are seen as developing into a consolidation pattern. That is, long term down trend from 195.86 (2015 high) and that from 251.09 (2007 high) are still in favor to extend through 116.83 (2011 low). We’ll hold on to this bearish view as long as 156.59 key resistance holds.
