GBP/USD Price Analysis: A Round 1 knockout victory for the bulls ahead of US CPI

• GBP/USD short squeeze takes out the weaker hands start of the week. 
• GBP/USD downside thesis on the daily chart is still valid around the US CPI event.

GBP/USD has been on a tear as it pulls away from the start of the day's trapped shorts that were seeking a break below 1.2050 for the initial balance for the week. At the time of writing, GBP/USD is trading at 1.2140 and up 0.8% on the day. 

The following is an illustration of the price action and thesis for a long in the New York session ahead of this week's critical US Consumer Price Index and Retail Sales data the following day. 

GBP/USD daily chart

at first glance prior to the day, the market was appearing to be set up for a downside continuation given the correction to the 50% mean reversion and strong rejection from the bears. However... 

The bulls put on a short squeeze as illustrated above. 

GBP/USD M15 chart

As illustrated, the market was overwhelmed with sellers and the bulls took advantage of this to start the week. On Thursday, an influx of supply came on and Friday had more shorts coming into the market. On Monday, the bears attempted to get on board with what appeared to be a downside extension and breakout opportunity below 1.2050. However, there was a break of structure to the long side as follows: 

GBP/USD bears still in play

Nevertheless, the downside thesis on the daily chart is still valid around the US CPI event with the price still below the 1.2200 psychological level and a 50% mean reversion resistance that has a confluence with prior support looking left: