GBP/USD drops further and extends the corrective phase as the dollar is stronger lately. Is trading in the red and validates the yesterday’s breakdown. Will hit new lows in the upcoming period if the USDX will receive a helping hand from the US economy.

The dollar index tries to take out the 93.81 static resistance, will do this only if the United States high impact data will come in line with expectations or better, a disappointment will punish it. Price is almost to reach and retest a major static support, where he may find support again.

Unfortunately for the Cable, the UK’s data have come in mixed earlier and have failed the save it from downside. The CPI rose only by 2.6% in July, matching the 2.6% in June, but failed to reach the 2.7% estimate, while the Core CPI surged by 2.4%, less versus the 2.5% estimate. Moreover, the PPI Input increased by 0.0%, less compared to the 0.4% estimate, while the PPI Output increased by 0.1%, beating the 0.0% forecast.

The Cable received support from the HPI and from the RPI indicators, which have come in better than expected, have increased by 4.9% and by 3.6%, but unfortunately wasn’t enough.

Is going down  after the breakdown below the warning line (wl1) of the minor ascending pitchfork and is very close to hit the upper median line (UML) of the major descending pitchfork, where he could find temporary support.

I’ve said in the previous articles that a breakdown below the warning line (wl1) will open the door for more declines in the upcoming period. A drop towards the 1.2798 is favored as well at this moment, only a breakdown below the UML and below the 1.2798 level will confirm a massive drop in the upcoming weeks.

If you take a look closer you’ll notice that I’ve drawn a Rising Wedge pattern, which needs to be confirmed before we can take action again. Right now we don’t have any trading opportunity because the rate is located above some important support levels. We may have a buying opportunity from the confluence area formed by the UML with the 1.2798 level.