Overview

A rebound of GBP/JPY last week was limited by the 187.36 resistance so far, and there is no clear sign of strength yet. Nevertheless, development in other crosses suggests some yen weakness ahead. Initial bias in GBP/JPY is neutral this week. A firm break of the 187.36 resistance will argue that a fall from 195.86 has completed. More importantly, this will be a signal that a larger uptrend is resuming. Meanwhile, below 183.87, minor support will turn focus back to 180.36 instead. The break of the medium-term trendline support is taken as a sign of trend reversal. This is supported by bearish divergence condition in the weekly MACD. Besides, GBP/JPY was close to key cluster resistance of 61.8% retracement of 251.09 to 116.83 at 199.80, which is close to 200 psychological level. A break of 174.86 will confirm trend reversal and bring deeper fall to 38.2% retracement of 116.83 to 195.86 at 165.67. In case of another rise, we will be cautious of strong resistance from 199.80/200.00 to bring reversal finally.