GBP/USD dropped sharply to as low as 1.5557 last week and the strong break of 1.5706 cluster support confirmed our view that medium term rebound from 1.3503 is already finished. Initial bias will remain on the downside this week and further fall should be seen to 100% projection of 1.6875 to 1.5829 from 1.6456 at 1.5410 next. On the upside, above 1.5737 minor resistance will turn intraday bias neutral and bring consolidations. But upside should be limited well below 1.6067 resistance and bring fall resumption.
In the bigger picture, break of 1.5706 cluster support (38.2% retracement of 1.3503 to 1.7043 at 1.5691) confirmed our view that medium term rebound from 1.3503, which is treated as a correction to down trend from 2.1161, has completed at 1.7043 already. fall from there is tentatively treated as resumption of the down trend from 2.1161 and should target a new low below 1.3503. On the upside, break of 1.6456 resistance is needed to invalidate this view. Otherwise, medium term outlook will now remain bearish.
In the longer term picture, the corrective nature of the multi-decade advance from 1.0463 (85 low) to 2.1161 as well as the impulsive nature of the fall from there suggests that GBP/USD is now in an early stage of a long term down trend. Rebound from 1.3503 should have completed and the whole fall from 2.1161 is likely resuming for 61.8% projection of 2.1161 to 1.3503 from 1.7043 at 1.2310 next.