GBP/USD has developed a potential Head&Shoulders pattern on the H4 chart, but this is far from being confirmed. The pair maintains a bullish perspective right now, only a USDX's rally caused by the FED could send the price down again.
In this article, we'll talk about two scenarios, a selling one, and a buying opportunity if the chart pattern will be invalidated. The FOMC Statement, Federal Funds Rate release, and the FOMC Press Conference will shake the markets, the pair will be driven by the fundamental factors.
The US is to release the Advance GDP and the Pending Home Sales later today as well, the dollar could be hit by some poor data. The Dollar Index is trading in the red ahead of these events, maybe it would be better for you to stay away till we'll have a clear direction and a fresh signal.
GBP/USD will validate a potentially significant drop only if it will make a valid breakdown below the H&S neckline and below the 50% retracement level. As I've said earlier, GBP/USD is bullish at this moment, a further increase will be confirmed if the price will make a valid breakout above the 61.8% retracement level, above the sliding line (SL) and if it will make another higher high.
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We may have a selling opportunity if GBP/USD will validate the H&S pattern, so if the price will drop and stabilize below the neckline and below the 50% level, we could sell this pair with a Stop Loss above the right shoulder. The downside target is seen around the 23.6% retracement level.
GBP/USD will resume the upside movement towards the 100% level, 1.3199 level, if the price will ignore the sliding line (SL), the 61.8% level and if it will close and stabilize above the 1.2647 former high.
