Bullish Breakout Scenario (Reversal):
Alternative Idea: Instead of reversing at the strong selling zone, GBP/USD could break above the resistance level at 1.2940 and continue upward.
Trigger: If strong bullish momentum emerges (e.g., fueled by positive UK economic news or weak US dollar sentiment), this could invalidate the bearish setup and turn the trend bullish.
Next Target: A breakout might push the price toward 1.3000 or higher, targeting previous swing highs.
2. Range-Bound Movement:
Alternative Setup: GBP/USD may fail to show any clear breakout and instead consolidate within a tight range between 1.2880 and 1.2940.
Trigger: Lack of volume or mixed economic data could lead to sideways movement, trapping traders expecting immediate directional momentum.
3. Bullish Divergence Possibility:
Technical Suggestion: Check for a potential bullish divergence on momentum indicators like RSI or MACD, where price is making lower lows, but the indicator shows higher lows.
Implication: This could signal weakening bearish pressure, increasing the chances of a reversal.
4. Fundamental Risk:
Macroeconomic Impact: The chart analysis could be disrupted by upcoming events like central bank decisions, inflation data, or geopolitical developments that may favor either currency