Early in the European session, the British pound (GBP/USD) is trading around 1.2235 bouncing above the 4/8 Murray and below the 21 SMA located at 1.2257.
According to the 4-hour chart, the British pound sharply broke the uptrend channel formed since March 8. A technical rebound towards the 1.2294 resistance zone is expected in the next few hours so that the instrument resumes its bearish cycle.
The key level is located at 1.2207 and could offer recovery of the pair above this area for the next few hours. In case the British pound falls below this level, we could expect it to resume its downward movement and it could reach the 200 EMA located at 1.2121.
A return above 1.23 could open the doors for a new bullish sequence and the British pound could reach 6/8 Murray located at 1.2451.
Below 1.21, we could expect a sustained trend reversal and the pound could fall towards the psychological level of 1.20 and finally hit the low of March 8 at 1.1801.
Our trading plan for the next few hours is to buy above the 4/8 Murray, with targets at 1.2257 (21 SMA) and 1.2294. This move could rekindle the bearish cycle and therefore, we could wait for the resistance of 1.23 to sell, with targets at 1.2121 (200 EMA).