GBP/USD has closed the last session in the red and seems heavy on the short term. It has failed to reach a very, very strong dynamic resistance and now we may see a potential drop if the USDX will slip lower again.

I’ve told you in the previous report that we may have only a temporary rebound on the Daily chart before the rate will start to drop again. It is very important to see what will happen on the dollar index in the upcoming days because the rebound could be only temporary. So, a USDX’s further drop will force the dollar to lose more ground versus all its rivals.

I’ve added the USDX’s daily chart to show you why the GBP/USD has slipped lower. You can see that the index has bounced back from above the inside sliding line (sl) of the ascending pitchfork. It remains to see if it will have enough directional energy to approach and reach the 50% Fibonacci line again or this will be only a temporary rebound.

Personally, I believe that the rate could try once again to pressure the inside sliding line in the upcoming days, so only another false breakdown will signal a potentially significant upside movement.

Price has rebounded on the short term, but it has failed to reach and retest the median line (ML) of the major descending pitchfork and the 50% retracement level. Right now we have another false breakout above the 50% Fibonacci line of the descending pitchfork.

Only a valid breakout above the 50% Fibonacci line will signal a further increase and maybe the rate will try once again to make a valid breakout above the ML and above the median line (ml) of the descending pitchfork.

A failure to reach the ML and a drop below the 61.8% retracement level will give us a chance to go short again, but only if the USDX will show signs that it could make a significant upside move.