GBP/USD is trading around 1.2050 above the 200 EMA located at 1.2016 and below the 21 SMA and within the downtrend channel formed on December 13.
Last week, we saw that the pound reached the bottom of the downtrend channel around 1.1991 and since then, there was a technical bounce aimed at the 21 SMA (1.2091).
In the event of a sharp break and a daily close above 1.2091 and above the downtrend channel, we could expect the pound to recover in the coming days and it could reach 6/8 Murray located at 1.2207 and could even reach the key zone of 1.2345 (high of December 5).
On the other hand, in the event that the British pound consolidates below the 200 EMA, it is likely to continue falling and could reach the psychological level of 1.15 in the coming days. In daily charts, we can see that the British pound is overbought. If GBP/USD falls below 1.2016, we could expect a decline in the coming days towards 1.1962, 1.1718, and to 3/8 Murray at 1.1474.
Due to the Christmas and New Year holidays, GBP/USD is likely to consolidate in the coming days at levels of 1.21 towards 1.1962. These levels represent areas of resistance and support. We are unlikely to see big moves at least until the US jobs data.
The major banks are closed and after the session resumes, we could expect the market to be gapped and the British pound could reach the resistance at 1.21 and then start a bearish move towards the 200 EMA at 1.2016 and to 1.1962 (5/8 Murray).
