Early in the American session, the British pound is trading at 1.2030 showing some support above the psychological level of 1.20. We can see on the 4-hour chart that the pound is oversold and it is likely that there will be a technical bounce in the next few hours.
GBP/USD pair fell rapidly after breaking the zone of 2/8 Murray (1.2207) and the 200 EMA (1.2220) reaching 1.2020, the lowest low for now.
The weakness in the GBP/USD pair came on the back of the surprisingly strong US jobs report which raised speculation that the Federal Reserve could raise its interest rate again at its next meeting in May.
According to the eagle indicator, it suggests that the pair is oversold and that a prolonged bounce could take place in case the British pound manages to stabilize above 1.2020.
In case of a break below the psychological 1.20 level, we could expect a bearish acceleration. Therefore, GBP/USD could find strong support at 1/8 Murray located at 1.1962 and would be seen as a signal to buy on the technical bounce.
Our trading plan for the next few hours is to buy the British pound above 1.2030, with targets at 1.2070 and 1.2155.