FX.co ★ Trading Signals for GBPUSD on February 6-8, 2024: buy above 1.2530 (200 EMA - 1/8 Murray)

Early in the American session, the British pound is trading around 1.2560 bouncing after having reached the bottom of the downtrend channel formed between November 19, 2023, and after having reached the 200 EMA located at 1.2531.

GBP/USD is consolidating above the 200 EMA and below 2/8 Murray (1.2573). In the next few hours, the instrument could likely return towards the area of 1.2680 (21 SMA), a level of strong resistance.

According to the daily chart, the British pound is consolidating above 1/8 Murray and above the 200 EMA, which could favor a recovery in the coming days, only if GBP/USD trades above 1.2530.

The psychological level of 1.25 could also serve as dynamic support, but we should expect the pair to bounce above this area which will allow us to buy.

According to the H4 chart, on February 4, the British pound reached the extremely oversold zone. It is likely to continue to bounce in the coming days which could be used as an opportunity to buy above 1.2530 with targets at 1.2573, 1.2534, and 1.2730.

Our bullish outlook could be invalidated if the British Pound consolidates below 1/8 Murray and below the 200 EMA. Then, there could be a continuation of the bearish movement and the instrument could accelerate its decline and reach 1.2240. GBP/USD could even reach the psychological level of 1.20.

Our trading plan for the next few hours is to buy the British pound in case it rebounds above 1.2530 with the target at 1.2680. The eagle indicator on the H4 chart is giving a positive signal which supports our bullish strategy.