GBP/USD at confluence. What now?

GBP/USD stands at 1.3753 above 1.3741 and is fighting hard to come back higher. Unfortunately, the sellers are very strong as the Dollar Index is still bullish. Technically, a temporary rebound could help us to catch new downside movements.

Today, the British pound was punished by the UK Retail Sales indicator which has registered a 0.9% drop in August versus a 0.5% growth expected. In addition, the Consumer Inflation Expectations registered a 2.7% growth compared to 2.4% in the previous reporting period.

GBP/USD could resume its downside movement if it makes a valid break through the weekly S1 (1.3737) and below the 150% Fibonacci line of the Ascending Pitchfork. The pair signaled an important sell-off after dropping below the outside sliding line (SL1) of the Ascending Pitchfork.

A temporary rebound will be possible only if the price makes a false break below the mentioned downside obstacles. If the pair resumes its downside movement, the weekly S2 (1.3650) and the lower median line (LML) are seen as potential downside targets.

Closing and staying below the S1 and under the 150% Fibonacci line indicates a further drop at least towards 1.3700 psychological level.