GBP/USD bounced back from the 1.38 psychological level and now is traded right below the 1.39 level. The USDX's current sell-off helped the Pound to take the lead versus the greenback.
The USD loses ground ahead of the US inflation data reported tomorrow. The CPI is expected to increase by 0.4%, while the Core CPI may increase by 0.2%. Better than expected data could force the USDX to resume its bullish reversal. This scenario could bring a new sell-off on GBP/USD.
GBP/USD is still into a corrective phase, this could be ended only if the short-term Falling Wedge pattern will be validated.
Is GBP/USD Correction Over?
As you can see on the H4 chart, GBP/USD is traded far above the long-term uptrend line. The price action develops a Falling Wedge reversal pattern. A valid breakout from this formation could signal that the corrective phase has ended and that GBP/USD could start increasing again in the short term.
The pair has found support right on the 61.8% retracement level and now is traded back around the Pivot Point (1.3875) and below the 50% retracement level. The selling pressure remains high as long as the rate is traded below the downtrend line, falling wedge's resistance.
Failing to stabilize above the pivot point and falling back below the 61.8% retracement level could signal a further drop towards the major uptrend line.
Forecast & Tips!
Breaking above the downtrend line, testing, and retesting it could bring a good long opportunity. So, a valid breakout from the Falling Wedge pattern signals an up reversal.
Selling will be indicated by a false breakout with great separation above the downtrend line or by a major bearish engulfing printed right on the Falling Wedge's resistance.
