GBP/USD's sharp decline last week indicates that a short term top is at least in place at 1.5997 after hitting 61.8% retracement of 1.7043 to 1.4230 at 1.5968. Focus will now turn to near term trend line support (now at 1.5547). Sustained trading below there will indicate that whole rise from 1.4230 has finished earlier than we thought and will bring deeper fall to 1.5123 cluster support (50% retracement of 1.4230 to 1.5997 at 1.5114) for confirmation. On the upside, break of 1.5997 is needed to confirm rally resumption. Otherwise, risk will now remain on the downside.

In the bigger picture, price actions from 1.3503 are viewed as consolidation to fall from 2.1161 only with rise from 1.4230 as the third leg. In any case, a break of 1.4230 support will indicate that the consolidation might be completed and down trend from 2.1161 is possibly resuming for another low below 1.3503. In case of another rise, we'd expect strong resistance between 1.7043 and 50% retracement of 2.1161 to 1.3503 at 1.7332 and finally bring long term down trend resumption.

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. Another low below 1.3503 is anticipated after rebound from 1.3503 is confirmed to be completed.

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