GBP/USD edged higher to 1.2813 last week but formed a short term top ahead of 61.8% projection of 1.1409 to 1.2647 from 1.2065 at 1.2830 and reversed. Initial bias is mildly on the downside this week. Sustained break of 55 day EMA (now at 1.2458) will argue that whole rebound from 1.1409 has completed. In this case, deeper decline would be seen to 1.2065 support for confirmation. On the upside, above 1.2653 minor resistance will turn bias back to the upside for retesting 1.2813 instead.
In the bigger picture, while the rebound from 1.1409 is strong, there is not enough evidence for trend reversal yet. Down trend from 2.1161 (2007 high) should still resume sooner or later. However, decisive break of 1.3514 should at least confirm medium term bottoming and turn outlook bullish for 1.4376 resistance first.
In the longer term picture, long term outlook remains clearly bearish, as it’s held well below long term falling trend line that started back at 2116 (2007 high). Prior rejections by 55 month EMA also affirmed bearishness. Further fall is expected as long as 1.3514 resistance holds.
