GBP/USD's break of 1.6750 resistance last week indicates that fall from 1.7043 has completed with three waves down to 1.5706 already. The three wave structure in turn indicates that whole medium term rise from 1.3503 is still in progress. Retreat from 1.6841 should have completed at 1.6516 after drawing support from the near term trend line. Initial bias will be on the upside this week for 1.6841 first. Break will target a retest on 1.7043 resistance. On the downside, though, below 1.6516 will argue that whole rise form 1.5076 has completed. Further break of 1.6261 will confirm and turn outlook bearish.
In the bigger picture, the corrective structure of the fall from 1.7043 to 1.5706 indicates that whole medium term rise from 1.3503 is still in progress and should extend beyond 1.7043 before completion. Nevertheless, we'll continue to look for loss of momentum and reversal signal as GBP/USD enters into resistance zone of 1.7332/8236 (50% and 61.8% retracement of 2.1161 to 1.3503). Rise from 1.3503, which is treated as a correction to down trend form 2.1161 only, should be limited by this resistance zone and bring long term down trend resumption. On the downside, break of 1.5706 will signal that such medium term rise has completed and will turn outlook bearish for retesting 1.3503 low.
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, which is treated as correction in the larger down trend, should be limited by resistance zone of 1.7332/8236 and bring down trend resumption towards 1.4063 low. We'll hold on to the bearish view as long as 1.8236 fibonacci level holds.