1. A computer-implemented method for forming a compressed digital video signal from a target digital video signal representative of a target image in a sequence of digital motion video images, said target image being represented by an array of pixels, the method comprising the steps of: (a) selecting a previous image from said sequence; (b) determining whether said target image is within a fade and, if said target image is determined to be within a fade, then calculating a base image by adjusting the brightness of said selected previous image; step (b) comprising the steps of: determining the average value of said target image: (ii) determining the average value of said selected previous image: (iii) calculating a brightness difference value by determining the difference of the average values determined in steps (b)(i) and (b)(ii); and (iv) calculating a base image by reducing the brightness of said selected previous image by said brightness difference value; (c) providing at least one displacement vector representing the magnitude and direction of the displacement between at least one region of pixels in said target image and a corresponding region of pixels in said base image; (d) applying said at least one displacement vector to a corresponding region of pixels in a previous reconstructed image to form a predicted image; (e) encoding said at least one displacement vector; (f) subtracting pixel values in said predicted image from corresponding pixel values in said target image to form an error image; (g) encoding said error image; and (h) forming said compressed digital video signal from said target digital video signal in accordance with said at least one encoded displacement vector and said encoded error image, wherein said compressed digital video signal is an electrical signal representative of said target digital video signal; wherein said pixels of said target image have associated values representative of the amplitude of said target digital video signal, and wherein said target digital video signal is representative of an electrical signal used to display said target image.