ActionForex

Daily Pivots: (S1) 131.97; (P) 132.70; (R1) 133.17;

Outlook in GBP/JPY remains unchanged. While another decline might be seen, downside is expected to be contained by key long term cluster support at 129.32 to complete fall from 165.02. Above 139.17 will indicate that a short term bottom is at leaset formed and strong rally shoudl then be seen towards 165.02 resistance.

In the bigger picture, while decline from 215.87 is still in progress, it might be near to completion. The fall from 215.87 is treated as a five wave sequence, with first wave completed at 184.47, second at 197.42, third at 139.02, fourth at 165.02. In other words, decline from 165.02 is probably the fifth wave in such sequence. Note that firstly, the structure of the fall from 165.02 suggests that it might be in form of a diagonal triangle (or falling wedge). Secondly, bullish convergence conditions are seen in daily MACD and RSI. Both are supporting the view that it's a fifth wave. Also note that 129.32 key long term support is in proximity to 61.8% projection of 197.42 to 139.02 from 165.02 at 128.92.

Having said that we'd expect the decline from 215.87 to make a medium term bottom after meeting 128.92/129.32 support zone. Break of 139.17 will be consistent with this case and bring strong rebound towards first medium term resistance at 165.02 at least. On the downside, however, sustained break of 128.92/129.32 will pave the way to 100% projection target at 106.62.