On October 21, the GBP/USD pair was demonstrating an ascending wedge reversal pattern while approaching the depicted SUPPLY-zone (1.2980-1.3000). This pattern was confirmed on October 22.
Since Then, the GBP/USD pair has failed to achieve a persistent bullish breakout above the depicted SUPPLY-zone (1.2980-1.3000) which corresponds to a previous Prominent-TOP that goes back to May 2019.
This indicated a high probability of bearish reversal around the mentioned price zone. Hence, a quick bearish movement was initiated towards 1.2780 (Key-Level) where bullish recovery was demonstrated on two consecutive visits.
That’s why, the GBP/USD pair has been trapped between the mentioned price levels (1.2780-1.3000) until Wednesday when bullish breakout above 1.3000 was achieved.
Short-term technical outlook remains bullish as long as consolidations are maintained above 1.3000 on the H4 chart.
On the other hand, the pair is currently testing the upper limit of the newly-established depicted short-term bullish channel. That’s why, high probability of bearish rejection exists around the current price levels.
Conservative traders may have to wait for a bearish pullback towards 1.2980-1.3000 for a valid BUY signal.
Estimated bullish target would be located around 1.3120 and 1.3150.
On the other hand, please note that any bearish closure below 1.2980 invalidates the bullish scenario for the short-term allowing further bearish decline towards 1.2900 then 1.2850.