The GBP/USD made a strong bearish retracement at the previous top (red). Price could either be building a bearish reversal after it completed bullish waves 5 or it could keep pushing for one higher high. A bullish breakout could see price make an extension towards the round level at 1.45 whereas a bearish reversal could see price break below the support trend line (green).
The GBP/USD bearish pullback has retraced all the way back to the 61.8% Fibonacci level, which is a key level for the wave 4 (black) pattern. A bullish breakout above the local resistance (orange) could indicate a move higher towards the Fib targets of wave 5 whereas break below the 61.8% makes a wave 4 less likely and a break below the blue line invalidates this wave pattern. Considering the strong bearish momentum, a reversal might occur but the breakout direction is key.
