Early in the American session, the British pound is trading around 1.1850. It means that GBP/USD is going through a technical correction and is located above the 21 SMA which matches 1.1842.
On the 4-hour chart, we can see the formation of a symmetrical triangle. If the pound breaks below this level and consolidates below the 21 SMA located at 1.1842, it could be a clear signal to sell with targets at 8/8 Murray located at 1.1718 and towards the bottom of the uptrend channel around 1.1680.
Additionally, with a sharp break of the uptrend channel formed since the beginning of November, we could expect a fall towards the 200 EMA located at 1.1494. This would be the key level and below this level, the instrument could begin a change in trend.
In case of a drop below 1.1842, we could expect a technical bounce around 1.1718 or 1.1680. Around this area, there could be a signal to buy the British pound with targets at 1.1841 and 1.1962.
The US dollar (USD) index is recovering and winning back the previous day's losses which is a factor putting some bearish pressure on the GBP/USD pair.
Our trading plan for the next few hours is to sell below 1.1842, with targets at 1.1718 and 1.1680. In case the British pound settles above 1.1850, we should avoid selling and wait for the price to reach the resistance zone of 1.1962.
Since November 15, the eagle indicator has been showing a negative signal. Therefore, any technical bounce towards the area of 1.1962 (+1/8 Murray) or the psychological level of 1.2000 will be considered an opportunity to sell, with targets at the psychological level of 1.1500 in the short term.
