GBP/USD is trading in the red right now, the retreat is normal after the impressive bullish movement. The pair is trading at 1.2521 level, it was rejected by a strong static upside obstacle, and now is challenging the near-term support.
The USDX's rebound has lifted the dollar, that's why GBP/USD is losing ground in the short term. However, the price maintains a bullish bias, despite the minor drop, the current drop could bring a great long opportunity.
GBP/USD has found strong resistance at the R1 (1.2605) level and now is pressuring the 61.8% retracement level and the median line (ml) of the orange ascending pitchfork. A valid breakdown below these support levels will suggest a drop towards the inside sliding line (sl) of the ascending pitchfork.
Technically, the current drop is natural, the price always comes back to test and retest the median line (ml). A rejection or a false breakdown with a huge separation will signal a further increase.
Still, a great buying opportunity will be signaled by a valid breakout above the R1 (1.2605), the next upside targets are seen at the upper median line (UML) and at the R2 (1.2865) level.
- GBP/USD Trading Tips
Long above 1.2614 former high with targets at the upper median line and at the R2 (1.2865) level. Also, a false breakdown and a rejection from the median line (ml) along with the Stochastic oversold could bring a long signal sooner.
GBP/USD is bullish as long as it is traded above the inside sliding line (sl) of the ascending pitchfork. The sliding line (sl) could offer a long opportunity as well.
The pair is bullish, so I believe that only a valid breakdown below the PP (1.2340) and below the 50% level will announce a larger drop. In the short term, we could sell GBP/USD if it closes below the median line (ML) and if it comes back to test and retest this broken dynamic support.