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Technical analysis of GBP/USD for December 7, 2015

According to the daily chart, GBP/USD established a long-term downtrend after the price rejected 1.5927 on June 18, 2015. Since then, the price has consistently been declining and it seemed that the pair found the support at the 1.5170 level, although it was broken after consolidation on November 6, 2015.

In addition to the breakout of the support, the price also broke below the 61.8% Fibonacci applied to the low of April 14 and the high of June 18. At the same time, the S1 (1.4886) support, that is 76.4% Fibs, has not been tested yet. This could be a strong signal that the downtrend is not over, at least until the price tests the S1 support level.

Consider selling GBP/USD, while the price is near R1 (1.5085), targeting S1 (1.4886). The stop loss could be placed just above the R2 (1.5770), which currently seems to be the key resistance level.

Support: 1.4886

Resistance: 1.5085, 1.5170

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