Early in the Asian session, the British pound (GBP/USD) is trading around 1.1325 below the 200 EMA and 21 SMA. We can note that the pair opened with a bearish gap of 67 pips at 1.1303. The pair is expected to cover this GAP in the next few hours.
On Friday of last week, the British pound reached the 200 EMA (1.1365) followed by the high at 1.1381. This happened after the price had touched the bottom of the downtrend channel at 1.1143. In the next few hours, the bearish British pound is expected to reach 2/8 Murray located at 1.1230 on the condition it settles below 1.1365.
The US dollar suffered a drop in favor of GBP/USD. Positive data was released on Friday. USD remains on the defensive despite the fact that the US economy created more jobs than expected in October (261,000), while the unemployment rate rose to 3.7%.
According to the technical analysis, a daily close above 1.1365 -1.1380 will be a clear signal to buy with targets at 1.1474 and at the psychological level of 1.15, which coincides with the top of the bearish channel.
The key level for the next few hours is to watch the area of 1.1365. Below, we will continue to sell, because the pair will be under downward pressure and could fall to 1.1150.
According to the 4-hour chart, the British pound is trading within a downtrend channel. A daily close above 1.15 will be the start of a bullish cycle and the price could reach 4/8 Murray at 1.1718 and even to the psychological level of 1.20.
The eagle indicator is giving a negative signal and approaching the oversold zone. So, we could expect a pullback in the pound and it could find strong support that will give it a technical rebound around the 1.1230 zone to resume the bullish cycle again.
Our trading plan for the next few hours is to sell GBP/USD below 1.1381 and below 1.1365 (200 EMA) with targets at 1.1300 and 1.1230(2/8 Murray).
