FX.co ★ Trading Signal for GBP/USD for December 27 - 28, 2022: buy above 1.20 (200 EMA - oversold)

Early in the American season, the pound sterling is trading around 1.2024, pulling back after reaching the 1.21 level during the European session.

GBP/USD is facing key support. Should there be a bounce above 1.2018, where the 200 EMA is located, it could offer an opportunity to buy the pound sterling with targets at 1.2075.

Additionally, with a sharp break of the uptrend channel, we could expect a bullish move above 1.2075 with targets at 6/8 Murray located at 1.2207.

On the other hand, if the pound sterling falls and closes on daily charts below the psychologically important level of 1.20, it could be the start of a bearish movement. The pair could reach the low of November 29 around 1.1901.

According to the 4-hour chart, we can see that a bearish inverted pennant pattern is forming, which is likely that if the pound sterling falls below 1.2018, a new downward movement could be confirmed and this could reach 1.15 in the short term.

The outlook for the pound sterling remains positive as long as it trades above 1.20. On the 4-hour chart, it can be seen that it is oversold and the eagle indicator is touching the 5-point zone, which represents an imminent rebound. Therefore, the pound sterling is likely to bounce above 1.2018 which will give us an opportunity to buy with targets at 1.2075 (21 SMA) at 1.2150 and 1.2207 (6/8 Murray).