GBP/USD reached a high of 1.2247 supported by the US inflation data. The pound sterling was unable to sustain gains above this level and is now trading below 1.2207 showing levels of exhaustion.
The 1.2247 area has become a strong resistance which coincides with the high of December 15. The attempts made by the British pound to break this level and consolidate above it failed, which is a sign that we could expect a technical correction in the next few days.
6/8 Murray represents an area of strong resistance. If the British pound falls below this level, it will be a clear signal to sell with targets at the 21 SMA located at 1.2171 and 1.2060.
Additionally, if GBP/USD closes on the 4-hour chart below this level on the 4-hour chart, it will be a clear signal to continue selling with targets at the 200 EMA located at 1.2056.
Only a daily close above 1.2250 could mean a resumption of the uptrend. In case the pound sterling returns to this area, we should buy, with targets at 1.2335 and 7/8 Murray located at 1.2451.
Therefore, as long as the instrument trades below 1.2241, there is strong bearish pressure and any technical bounce will be seen as an opportunity to sell. The eagle indicator is oscillating in the extremely overbought zone, warning that a technical correction is likey to follow in the next few days.