GBP/JPY rebounded strongly to as high as 135.17 last week but upside was limited below 135.48 resistance and the cross retreated towards the end. Initial bias is neutral this week first. We'd expect more consolidations below 135.48 and below 132.80 will flip bias to the downside for 131.10 and below. Nevertheless, we'd still expect strong support from 61.8% retracement of 125.48 to 135.48 at 129.30 to contain downside and bring rebound. On the upside, decisive break of 135.48 will confirm resumption of rally from 125.48 and target 137.75 resistance first.

In the bigger picture, price actions from 118.81 are treated as consolidation in the larger down trend from 251.09, with first leg finished at 163.05. Choppy fall from 163.05 is treated as the second leg and should be finished at 125.48 already. The third leg of consolidations should have started at 125.48 and should now target 163.05 and above. Though cluster resistance at 38.2% retracement of 251.09 to 118.81 at 169.34 and 100% projection of 118.81 to 163.05 from 125.48 at 169.72 should limit upside and bring reversal.

In the longer term picture, fall from 251.09 is treated as resumption of multi decade down trend. Note that the fall from 215.87 is not treated as the fifth wave, but the third wave inside the third wave that started at 241.35. Another long term decline is still expected after completion of the correction/consolidation from 118.81, towards 100 psychological level.

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