GBP/USD – Long term
5 Jan 2016
GBP/USD has effectively been trapped within a 1.4234-1.4568 to 1.7041-1.7186 range over the past 7 years following the slide from the November 2007 peak at 2.1158 (highest level since reversal from November 1980 peak at 2.4546) to reach 1.3500 in January 2009. The range highs were between the 38.2% and 50% retracements of the fall from 2.1158. The multi-year range highs were spot-on the 120 month (10 year) moving average and with the bounce from the April 2015 low at 1.4568 having turned down from the 60 month (5 year) moving average we are wary that the latest retreat may mark the start of a move back towards the 2008 extreme low at 1.3500. We have two measured moves targets slightly beyond 1.3500 at 1.3309 & 1.3309 and a move to test that area could be seen by mid 2016. The avert the danger, we need to see the latest decline from 1.5927 leave a higher low above 1.4568, ideally by the 2013 low at 1.4818, followed by a push over the 2015 high at 1.5927, in which case a fresh test of the 120 month (10 year) moving average is likely.
GBP/USD MONTHLY CANDLESTICK CHART