Early in the American session, the British pound was trading around 1.2079, approaching the top of the downtrend channel formed on December 15, trading above the 21 SMA and above the 200 EMA.
GBP/USD has managed to recover some of the daily losses after testing the psychological 1.2000 level during the session on Wednesday. The bulls defended the 1.20 level which gave GBP/USD a chance of a technical bounce, which could continue to rise in the coming days.
The short-term GBP/USD technical picture shows that the uptrend remains intact and further gains could be seen only if it consolidates above 1.2000 and becomes strong support.
According to the 4-hour chart, the British pound is showing upside potential as the eagle indicator has reached the oversold zone around 5-points. In the event that the pound consolidates above 1.2050, it is expected that in the coming days it will continue to rise and could reach 1.2150 and could even reach 6/8 Murray located at 1.2207.
During the last sessions, it has been shown that the psychological level of 1.20 is offering support to the British pound and as long as it trades above this level there is the potential for the bullish cycle to resume and this could reach in the short term in the area of 7 /8 Murray located at 1.2451.
Conversely, in the event that the British pound falls below 1.2020 and makes a daily close below the 200 EMA it will be a clear signal to resume selling with targets at 1.1962 (5/8) and 1.1718 (4 /8 Murray).
Our trading plan for the next few hours to buy the British pound at current price levels or in the event of a technical bounce around 1.2050 will be a signal to buy, with targets at 1.2207. The Eagle indicator is giving a positive signal which supports our bullish strategy.
