Early in the European session, the British Pound (GBP/USD) is trading around 1.2277 with a bearish bias that started from the 1.2421 level.
On the 1-hour chart, we can see that GBP/USD broke below the 21 SMA and also broke the symmetrical triangle pattern. It is likely to continue bearish over the next few days until the price reaches 4/8 Murray at 1.2207 and finally the psychological level of 1.20
Last week, after the publication of the US inflation data, the GBP/USD pair spiked to the high of 1.2421. As it failed to consolidate above 1.2400, it began a strong technical correction breaking through the key level of 1.2329.
This level of 1.2329 (5/8 Murray) served as a strong resistance in the past weeks and now the pound is trading below this level which suggests a negative outlook for the next few days.
In case there is a pullback towards the 5/8 Murray or the 21 SMA located at 1.2338, it could be seen as an opportunity to sell with targets at 1.2260 and 1.22 07.
In case GBP/USD resumes its bullish cycle, we should expect a close above 1.2360 on the daily chart. This level represents strong weekly resistance which could give a bullish boost to the pound and the instrument could jump to 6/8 Murray located at 1.2451.
Since March 29, the eagle indicator has been giving a negative signal. Therefore, any technical rebound that occurs in the next few hours will be seen as a signal to sell.
Our trading plan for the next few hours is to sell if the pound approaches the area of 1.2330 (5/8 Murray) with targets at 1.2294, 1.2260, and 1.2207 (4/8 Murray). A stop loss could be located if the pound rebounds above 1.2360.