Retracement in established short-term downtrend

• GBP/JPY is correcting in a new downtrend.
• The correction may eventually end and the downtrend resumes, pushing prices to new lows.

GBP/JPY has declined since returning to its September 2 high. A new short-term downtrend has probably now started, reversing the previous uptrend from August.

It most recently bottomed out on September 6 and pulled back. It now appears to be falling again, perhaps resuming the dominant downtrend.

GBP/JPY 4 Hour Chart

In technical analysis theory, the odds favor an extension of the established downtrend, which suggests further weakness as the short-term trend unfolds.

A break below 186.51 (September 6 low) will confirm a further decline towards the next target at 184.51 (August 8 low), followed by 182.82 (August 6 low). The ultimate downside target is the August 5 low at 180.06.