The GBP/USD further drop was invalidated. For now, the pair is drifting higher and is about to reach an important static resistance. The pair is trading at 1.2263, the pound sterling has taken full control as the USD is weakened by the USDX's current drop.

GBP is very strong in the short term, it has increased versus EUR and JPY as well, not only against the US dollar. The pair remains under some bearish pressure because is trading below an important upside obstacle.

GBP/USD has found strong support at the 38.2% retracement level and at the median line (ml) of the orange descending pitchfork, it has rebounded and has taken out the resistance represented by the black downtrend line, now is trading above the upper median line (uml), signaling a potential reversal.

A reversal could take place if GBP/USD makes a new higher high, if it closes and stabilizes above the S1 (1.2288), above the 50% retracement level, and above the 1.2295 former high.

The breakout from the descending pitchfork's body, above the upper median line (uml), has signaled that the downside movement could be finished, even if the H&S pattern has signaled a drop towards the 1.1850 level.

• GBP/USD TRADING RECOMMENDATIONS

We may have a long opportunity if GBP/USD closes and consolidates above the 1.2295 level and above the 50% level. Another higher high could signal a further increase towards the Pivot Point (1.2468) level, 61.8% could be used as a target as well.

Technically, GBP/USD could start another bearish momentum if the price makes only a false breakout with great separation, or a bearish engulfing, above the 1.2295 high. A bearish signal could appear also if the price decreases again and if it makes a valid breakdown below the 38.2% level.