DCB and consolidation:
- The 4H chart shows the pair bouncing back to almost 1.25 before going into a period of consolidation just above 1.21.
- We can see that there appears to be a range roughly between 1.2080 and 1.2325.
Preparing for a breakout:
- The overall technical picture for GBP/USD is still bearish.
- 1.2325 should be respected because the prevailing trend is bearish and still intact.
- But if price can climb back above 1.2325, then we would see a completed double bottom.
- A price bottom first revives the 1.2480 pivot.
- Above 1.25, GBP/USD could come up to test the 1.2790-1.2850 area, which was a critical support area from July through September. This time this area should provide some resistance.
- However, I think it would be hard for GBP/USD to climb back above 1.25 unless the FOMC backtracks again on its interest rate forward guidance. Note that there could be a falling trendline also to challenge GBP/USD if it approaches 1.25.