GBP/JPY Weekly Outlook

GBP/JPY edged higher to 152.52 last week but retreated since then. Breach of 150.76 minor support suggests short term topping, on bearish divergence condition in 4 hour MACD, after hitting medium term channel resistance. Intraday bias is mildly on the downside this week for pull back. But downside should be contained by 148.09 cluster support ( 23.6% retracement of 133.03 to 152.52 at 147.92) to bring rebound. For now, risk will stay mildly on the downside for more pull back as long as 152.52 holds, in case of recovery.

In the bigger picture, rise from 123.94 is seen as the third leg of the pattern from 122.75 (2016 low). Next target is 156.59 resistance (2018 high). Sustained break there should confirm long term bullish trend reversal. On the downside, break of 142.71 resistance turned support is needed to be the first sign of completion of the rise from 123.94. Otherwise, outlook will remain bullish even in case of deep pull back.

In the longer term picture, the strong break of 55 months EMA (now at 143.95) is a early sign of long term bullish reversal. Firm break of 156.69 resistance should now confirm the start of an up trend for 195.86 (2015 high).