FX.co ★ Trading Signal for GBP/USD for May 4-5, 2023: sell below 1.2570 (fractal - 21 SMA)

Early in the American session, the British pound is trading around 1.2576, above the 21 SMA, and around the 7/8 Murray line which represents a key technical reversal point.

On the 1-hour chart, we can see that the British pound formed a head&shoulders pattern. Hence, a break below the 21 SMA located at 1.2570 is likely to drive a bearish movement and GBP/USD could reach 200 EMA located at 1.2496.

Besides, on the chart, we can see the formation of a fractal. This is a clear sign of a technical reversal and it could be confirmed if the pound falls below the 7/8 Murray and below the 21 SMA. This move could be seen as an opportunity to sell with targets at 6/8 Murray around 1.2451.

The Eagle indicator has reached the extremely overbought zone around 95 points which is a sign that there could be a technical correction in the next few hours. For this, we should wait for the signal to be activated if the instrument trades below 1.2570.

On the contrary, in case the British pound consolidates above 1.26, it could mean an upward acceleration and GBP/USD could reach 8/8 Murray located at 1.2695.

Our trading plan for the next few hours is to sell the British pound if it drops below 1.2570 with targets at 1.2520 and 1.2496. The Eagle indicator is showing a negative signal which supports our bearish strategy.