From 1.5600 to 1.6060 the GBP/USD pair was considered as bullish, as it was moving within the depicted bullish channel which has been broken through last week.
The GBP/USD pair showed the massive bearish reaction after testing the 1.6060 level and breaking down 1.5880 the prominent support level, reaching the point 1.5830 which is a support level on the 4H chart (50% Fibonacci level).
The massive bearish reaction that was able to break down the lower limit of the depicted channel favours the bearish prospective rather than bullish one. However, having failed to break through 1.5830 two successive times may bring some bullish strength into the market at least towards 1.5960, hence 1.5830 may constitute a valid short-term BUY entry towards 1.5945-1.5970 with SL as its breakdown.
What favours this expected short-term bullish retracement is that the pair was trapped between 1.5880 and 1.5830 probably forming a confirmed short-term Head & Shoulders reversal pattern to be targeting to the backside of the lower limit of the broken channel to complete the right shoulder of the major Head & Shoulders pattern.
The sideways movement this week lasted longer than expected. However the expected sceanrio is still intact as long as the GBP is still moving within the depicted ranges.
Proceeding from the former price action in the current price zone 1.5830-1.6060 we can see that the GBP/USD pair is probably forming a H&S reversal pattern with neckline at 1.5830 and the right shoulder that is expected to be placed around 1.5945-1.5970 which constitutes a valid low/risk SELL entry.
Breakdown above the last recorded high at 1.6062 invalidates the bearish scenario. However, a breakdown of 1.5830 will confirm the reversal pattern allowing the GBP/USD to reach 1.5777 and 1.5650.