GBP/JPY stayed in range of 116.83/120.78 last week as sideway consolidation continued. Further recovery could be seen initially this week but we'd expect upside to be limited by 120.78 cluster resistance (38.2% retracement of 127.31 to 116.83 at 120.83) and bring fall resumption eventually. Break of 116.83 will extend recent decline from 140.02 to 110.00 psychological level first. On the upside, however, sustained break of 120.78 will confirm short term bottoming and would possibly bring stronger rebound back towards 123.29 support turned resistance.

In the bigger picture, fall from 163.05 is part of the long term down trend from 2007 high of 251.09 and is still in progress. Next target will be 61.8% projection of 215.87 to 118.81 from 163.05 at 103.06, which is close to 100 psychological level. on the upside, break of 130.83 resistance is needed to be the first signal of medium term reversal. Otherwise, outlook will remain bearish even in case of strong rebound.

In the longer term picture, fall from 251.09 is treated as resumption of multi decade down trend. Monthly MACD will likely be dragged down by the current decline, which suggest that the cross is building up downside momentum again. Current development now favors a break of 100 psychological level before the cross bottoms.

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