Early in the American session, the British pound is trading around 1.2654 above the 21 SMA within the downtrend channel formed since June 13. The pivot point is located at 1.2672. If GBP/USD trades above this level, it will be seen as an opportunity to buy.
If the British pound consolidates above 1.2654 (21 MSA) in the next few hours, we could expect a further bullish move and the price could reach 1.2700, which is the level that coincides with the top of the downtrend channel.
Following a sharp break above 1.2703, we expect the pound to continue a bullish cycle. If GBP/USD closes above 1.2726 (the high of June 30), it could reach +1/8 Murray located at 1.2817. If the instrument does not have a daily consolidation, it can offer just an opportunity to sell.
If the bullish force is weak, we could expect the pound to reverse downward and trade within the downtrend channel. If this scenario comes true, it could be seen as an opportunity to sell below the 8/8 Murray around 1.2695.
Immediate resistance is located at 1.2743. A break above 1.2726 could ease the immediate bearish bias and the price could recover to 1.2817 (+1/8 Murray). Conversely, a break below 1.2600 (200 EMA) could accelerate the bearish path and it could reach the psychological level of 1.25.
Our trading plan for the next few hours is to buy GBP/USD above 1.2664 with targets at 1.2700 and 1.2626. On condition of a fall below 1.2650, we should avoid buying. The Eagle indicator is giving a positive signal, which supports our bullish strategy.