GBPUSD had pushed through 1.3175 highs over the last week, before pulling back again. The currency is trading just above 1.3000 handle for now, and might be preparing to test 1.3175/1.3200 highs again. A break below 1.2850 would confirm that a meaningful top is in place.
GBPUSD seems to be unfolding into a corrective drop since 1.3488/1.3500 highs in early September 2020. The currency had reversed sharply from 1.3500 highs through 1.2675 lows, which could be labelled as potential Wave A as displayed on the chart here.
The subsequent rally, looks corrective and has managed to reach fibonacci 0.618 retracement of Wave A around 1.3175 last week. It is possible that corrective Wave B is terminated around 1.3175 or GBPUSD may push higher towards 1.3200 handle to complete Wave B correction.
Either ways, we remain prepared to sell on rallies towards 1.3175/1.3200 mark, as bears are poised to be back in control until prices stay below 1.3500 levels, going forward. Once the corrective Wave B is terminated, GBPUSD might resume lower towards 1.2200 handle as Wave C unfolds.
Also note that 1.2200 is fibonacci 0.618 retracement of the entire rally between 1.1414 and 1.3500 levels respectively. Probability for a bullish bounce remains high if prices drop through 1.2200 mark, going forward.
A drop below 1.2675 levels would confirm that bears are back in control and a meaningful lower high is carved. GBPUSD might accelerate lower towards 1.2200 levels thereafter.
Short against 1.3500, target is 1.2200