GBP/JPY Weekly Forecast

GBP/JPY's rebound from 154.03 was limited at 160.24 and subsequent break of 156.69 indicates that such rebound has already completed. importantly, the three wave corrective structure in turn argue that fall from 162.56 is not completed yet and is possibly resuming. Initial bias is mildly on the downside this week for 154.03 first and break will confirm this case and target 150.86 cluster support (50% retracement of 143.00 to 162.56 at 152.78) next. On the upside, though, break of 160.24 will invalidate this bearish case and suggest that rise from 154.03 is still in progress for 162.56 high.

In the bigger picture, medium term rise from 118.81 is treated as correction to the fall from 215.87 and is expected to conclude in 155.88/167.34 resistance zone (38.2% and 50% retracement of 215.87 to 118.81). Indeed, considering that 55 weeks EMA was just touched, and daily MACD and RSI have both broken their up trend, GBP/JPY has likely topped at 162.56 already. Break of 154.03 support, which will also have medium term channel taken out, will confirm this case and will likely encourage a retest of 118.81 low at least. However, before that, another rise cannot be ruled out. But after all, we'll continue to look for reversal signal even if such rally will extend.

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. In other words, the whole down trend shouldn't be over yet and would probably extend further to test 100 psychological level after completing the fourth wave consolidation from 118.81. However, note that sustained trading above 167.34 fibo resistance will seriously dampen this bearish case.

Based on ActionForex.com Technical Outlook