Wave structure and the break of a major trendline indicate that the GBPUSD has entered into a long term decline. This week, we’ll look at long term and short term bearish targets as well as potential resistance levels for next week.
The GBPUSD has fallen below a 6.5 year trendline, signaling an end to the uptrend from 2001. The wave count shown on the chart above shows that 5 waves are complete at 2.1160 and that a multi-year bear cycle is underway. Fibo support begins at 1.8303 and extends to 1.6539. The 4th wave extreme of one less degree, at 1.7064, is in the middle of that Fibo zone and is the multi-year target.
The daily perspective shows us what we can expect over the next several weeks / months. The bias is bearish and objectives are clustered in the 1.85 area; the 61.8% of 1.7047-2.1160 is at 1.8618, the 100% extension of 2.1160-1.9337/2.0396 is at 1.8573 and the 161.8% extension of 2.0396-1.9364/2.0156 is at 1.8487.
In the very short term, rallies should prove corrective. Fibo resistance begins at 1.9295 and extends to 1.9387. A reaction high from this morning (8/8) is in the middle of the Fibo zone at 1.9328. Also, keep your eyes on the short term resistance line drawn off of the 7/31 and 8/7 highs.