Early in the American session, the British pound (GBP/USD) is trading around 1.1103. We can see the breakout of the uptrend channel which has been unfolding since September 26. It is likely that around the zone of 1.108-1.1100, there will be a strong technical bounce because it is considered important support.
In the event of a bounce, a pullback towards the area of 1.1230 will be confirmed. If the British pound fails to break above 7/8 Murray and cannot return above the 21 SMA again, it will be seen as a signal to sell with targets at 1.0742.
Yesterday in our analysis, we highlighted that the 200 EMA area is considered strong resistance. Therefore, we predicted the pound to fall below this level towards the area of 1.11.
If GBP/USD falls below 1.1080 in the next few hours, we could expect it to reach the psychological level of 1.1000. This price action could accelerate the decline towards 6/8 Murray at 1.0740.
On the contrary, if the British pound manages to remain above the strong support of 1.1100, we could expect a recovery in the next few hours and GBP/USD could reach the resistance zone of 1.1230.
Our trading plan for the next few hours is to buy the British pound above 1.1103 with targets at 1.1200 and 1.1230.
In case of a daily close below 1.1080, we should avoid buying and could wait for the bearish cycle to resume and sell with targets at 1.0742.
