Forex Trading: GBP/USD Temporary Rebound August 18, 2018

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The rate has increased a little in the yesterday’s trading session and seems determined to come back to test and retest a former dynamic support. You should know that the perspective remains bearish on the Daily chart despite a minor rebound. It should drop much deeper after the aggressive breakdown below some very important support levels.

Maybe a temporary rebound is natural after the impressive sell-off but remains to see what will happen on the USDX as well. GBP/USD rebounded only because the USDX has dropped significantly in the last session.

The dollar index has plunged since Thursday and could reach the 50% Fibonacci line very soon. It remains to see how it will react when will hit the mentioned dynamic support. A valid breakdown through the downside obstacle will signal a further drop. However, this retreat could be only a temporary one before the rate will jump higher again.

The perspective remains bullish as long as the index stays above the upside 50% Fibonacci line of the ascending pitchfork and much above the median line (ml). Personally, I still believe that the index will make a valid breakout above the upper median line (UML) of the major descending pitchfork if it will reach it.

GBP/USD is expected to drop further after the breakdown through the uptrend line and below the lower median line (lml) of the minor descending pitchfork. It could test and retest the lower median line before will resume the downside movement.

A breakdown below the mentioned line it was expected after the failure to climb and retest the median line (ml) of the descending pitchfork. It has continued to pressure the lower median line (lml), so, technically, it is expected to drop further.

A false breakout above the lower median line (lml) it will give us a great chance to go short again on this major pair.

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