GBPUSD seems to be preparing for a bearish reversal, as long as prices stay below 1.3500 handle. The currency attempted to test recent swing highs around 1.3313 levels yesterday, before pulling back. A reversal lower from here should break below 1.2675, going forward.
GBPUSD had earlier managed to rally through 1.1414 lows through 1.3488 highs, almost taking out major resistances around 1.3200 and 1.3500. We have adjusted the wave counts here, as the above rally unfolded into 3 waves; A-B-C towards 1.3488 levels.
Ideally an A-B-C correction is retraced by another A-B-C structure and it could be a part of a triangle or sideways pattern. It would be simple to understand that GBPUSD might be preparing to drop lower, as long as prices stay below 1.3500 mark.
Looking at the recent wave counts, GBPUSD might have produced Waves A and B of the proposed corrective drop A-B-C here. Wave A could be labelled at 1.2675 lows, while B is seen towards 1.3315 respectively.
Also note that Wave B had reached up to fibonacci 0.786 retracement of Wave A. A bearish reversal here could bring bears back into control, pushing prices sharply lower towards 1.2675 levels at least. Alternately, a break above 1.3500 would change the short term structure.
Watch out for an Engulfing Bearish reversal pattern either today or tomorrow from current price action 1.3250 levels. Bottom line for the above to hold is 1.3488 levels, going forward. A slight test of 1.3315 highs remain possible though.
Remain short against $2075, target $1780.