GbpUsd could dive at least 500 pips if not even more

For nearly six months, the price action of GBPUSD has been rather dull, to say the least, with the pair confined within a 250-pip range. This stagnation is particularly notable for a pair as volatile as the cable.

However, upon examining a weekly chart, we can draw some conclusions and gain perspective on potential future movements. Three factors lead me to believe that a drop of at least 500 pips is in the cards for GBP/USD:

1. We've witnessed a false breakout to the upside, and typically, in the case of false breakouts, the asset tends to break in the opposite direction.
2. It's highly likely that this week will conclude with a bearish engulfing pattern on our chart.
3. Although not textbook-perfect, the structure of the last six months resembles a head and shoulders pattern.

Considering these factors collectively, I anticipate a downward break, with the initial support just above 1.2 coming into focus.

P.S: Given the pair's volatility and prolonged range-bound trading, in the event of a downward break, the movement could be quite violent. I wouldn't be surprised if we see a drop of 1,000 pips.