GBP/JPY's rally last week firstly indicates that choppy pull back from 125.82 is completed at 120.82 already. Secondly, rebound from 118.82 could finally be resuming. Initial bias remains on the upside this week for 125.82 first. Break will confirm the bullish case and target 100% projection of 118.82 to 125.82 from 120.82 at 127.82 next. On the downside, though, below 123.30 minor support will mix up the near term outlook and turn bias neutral again.

In the bigger picture, at this point, we'd like to maintain that price actions from 116.83 are corrective in nature so far. Rise from 118.82 could be the third leg of the pattern from 116.83 and might target 113.48 and above. But this is far from being certain. After all, the likely scenario is that we'll see more range trading between 116.83 and 140.02 (50% retracement of 163.05 to 116.83 at 139.94) ahead, before an eventual downside breakout. We'll favor this view as long as 140.02 resistance holds.

In the longer term picture, fall from 251.09 is treated as resumption of multi decade down trend. Current development gives no indication of medium term reversal yet and GBP/JPY would likely drop towards 100 psychological level on down trend resumption.

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