GBP/USD’s decline accelerated to as low as 1.2714 last week. The development confirmed completion of corrective rebound from 1.2391 at 1.3381. Larger decline from 1.4376 might be resuming. Initial bias stays on the downside this week for retesting 1.2391 low first. Break will target 61.8% projection of 1.4376 to 1.2391 from 1.3381 at 1.2154 next. On the upside, On the upside, above 1.2795 minor resistance will turn intraday bias neutral for consolidation first before staging another decline.
In the bigger picture, current development suggests that medium term decline from 1.4376 (2018 high) is not completed, and is possibly ready to resume. Decisive break of 1.2391 would target a test on 1.1946 long term bottom (2016 low). For now, we don’t expect a firm break there yet. Hence focus will be on bottoming signal as it approaches 1.1946. In any case, medium term outlook will stay bearish as long as 1.3381 resistance holds, in case of rebound.
In the longer term picture, consolidative pattern from 1.1946 (2016 low) could still extend with another rising leg. But after all, decisive break of 38.2% retracement of 2.1161 (2007 high) to 1.1946 at 1.5466 is needed to indicate long term reversal. Otherwise, an eventual downside breakout will remain in favor.
