GBP/JPY Weekly Outlook
GBP/JPY dropped to as low as 126.73 last week before turning sideway. The break of 130.00 confirmed that fall fro 145.94 has resumed. Hence, while some sideway trading might be seen this week initially, we'd expect upside to be limited by 132.78 resistance and bring fall resumption. Below 126.73 will target 118.18 low next. Nevertheless, bring of 132.78 will indicate that a short term bottom is formed, possibly with bullish convergence condition in 4 hours MACD. In such case, stronger rebound should be seen, possibly towards 140.55 resistance.
In the bigger picture, no change to our bearish view rebound from 118.81, which is treated as correction in the larger down trend from 2007 high of 251.09, has completed at 163.05 already after failing to sustain above 55 weeks EMA. Fall from 163.05 is tentatively treated as resumption of such long term down trend and should target 61.8% projection of 215.87 to 118.81 from 163.05 at 103.06 next, which is close to 100 psychological level. On the upside, break of 145.94 resistance is needed to invalidate this view. Otherwise, outlook will remain bearish.
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 from 118.81.