The GBP/USD showed a strong rally after reaching 1.31 support. Will price continue the bullish correction or will the downtrend emerge as the winner? For the moment a larger move up seems likely, at least towards the 23.6% Fib at 1.34. This is a major decision zone because a bullish breakout could confirm the start of a wave 2 (pink) whereas a bearish bounce could see price continue with the downtrend.
The GBP/USD could be building a potential wave 1-2 (blue) of a larger ABC correction if price breaks above the resistance trend line (orange) and 23.6% Fib at 1.34. Strong bearish price action could make this wave pattern invalid. The same would occur if price breaks below the bottom of 1.31.
