FX.co ★ Trading Signal for GBP/USD for May 17-31, 2023: sell below 1.2530 (21 SMA - 7/8 Murray)

Early in the American session, the British pound is trading around 1.2461, above the 6/8 Murray, and below the 21 SMA located at 1.2513. We can see that the GBP/USD pair is reaching overbought levels.

According to the daily chart, we can see that GBP/USD broke the uptrend channel formed since the beginning of March and is now consolidating below the 7/8 Murray. If it trades below 1.2573, we can expect the bearish pressure to continue and enable the instrument to reach the 200 EMA at 1.2233.

If in the next few days, the British pound trades below the 7/8 Murray (1.2573) and below the 21 SMA (1.2515), this would mean that it is preparing for a bearish move and is expected to drop as low as 4/8 Murray at 1.2207.

On the other hand, we could expect the British pound to consolidate below 1.2550 in the coming days, which could also be seen as an opportunity to sell.

In case the pound sterling rebounds and trades above 1.2580, our bearish view would be invalidated. So, GBP/USD is likely to resume its bullish cycle and could reach 8/8 Murray around 1.2695.

In view of the fact that the British pound is now trading below the bullish channel, this could be a sign to support our bearish strategy. In addition, we can see that the Eagle indicator is moving around the extremely overbought zone, which suggests a technical correction in the coming days.