GBPUSD is finding support around the 50-period simple moving average (SMA) on the four-hour chart and is pushing efforts to regain momentum within the 1.2400 area after a quiet start to the day.
Additional gains cannot be ruled out in the short-term as the RSI is trying to break its recent range, while the MACD is strengthening at a gradual pace in the positive area.
However, in terms of trend, a potential head and shoulders pattern seems to be in progress, sending a negative warning of a trend reversal. That said, to confirm the discouraging signal, traders would like to see the price closing decisively below the neckline that connects the 1.2164 and 1.2246 lows before turning cautious.
In this case a steeper decline could take place probably until 1.2160. Lower, the next stop could be somewhere between 1.2040 and 1.1975.
On the other hand, should buyers dominate, the price may attempt to re-challenge the 1.2520 level, where any successful break could open the way towards the 1.2645 top. Running higher, the price may hit a wall around the 1.2760 familiar barrier, while not far above it there is another key obstacle at 1.2845 that could block the rally.
In brief, even though upside risks remain intact, GBPUSD seems to be forming a bearish head and shoulders pattern. Yet, to confirm this negative trend signal, the pair needs to close decisively below the neckline and keep decelerating.
