Early in the American session, we can see that the British pound (GBP/USD) is trading around 1.2637. A strong bearish movement is unfolding after having broken below the 21 SMA located at 1.2719 and after having broken 8/8 of Murray.
According to the 4-hour chart, we can see that the pound broke sharply below the symmetrical triangle pattern, formed since June 21, but it could have difficulties to continue falling as there is strong support around 1.2590 (200 EMA).
Since June 13, the British pound has been making a technical correction and at the same time has been forming a downtrend channel. Today the pair is approaching the bottom of this channel around 1.2620. So, we could expect a strong technical bounce to occur.
In the next few hours, we could expect a technical bounce around 1.2620, which is the level that coincides with the bottom of the downtrend channel. Besides, we could expect the British pound to reach the 200 EMA around 1.2590, which could be seen as an opportunity to buy.
In case GBP/USD consolidates around 1.2620, it could be seen as an opportunity to buy with targets at 1.2695 (8/8 Murray) and 1.2720. Additionally, if we see a sharp decline, we should expect the British pound to consolidate around the 200 EMA at 1.2590 to buy with targets at 1.2695.
The eagle indicator reached the extremely oversold level which is a preface of a technical rebound in the next few hours. Therefore, we could wait for the key support levels to buy the British pound.