Early in the American session, the British pound (GBP/USD) is rebounding after reaching a low of 1.1899. This level coincides with the bottom of the downtrend channel which has been developing since December 15.
GBP/USD is currently trading around the 5/8 Murray. It is likely to continue its bounce and reach the 200 EMA located at 1.2043 and could even reach the top of the downtrend channel around 1.2095.
In the 4-hour chart, we can see that at the opening of trading this week, the British pound left a bearish gap. If GBP/USD manages to consolidate above 1.2040 (200 EMA), it could be an opportunity to resume buying and the instrument could cover the gap left at 1.2093.
In case the British pound fails to consolidate above the 200 EMA, we could expect a pullback towards 1.2040 which will give us a signal to sell with targets at 1.1962 (5/8 Murray) and 1.1890 (bottom of the bearish channel).
Our trading plan for the next few hours is to buy GBP/USD above 1.1962 or wait for a pullback towards 1.2040 (200 EMA) to sell with targets at 1.2000, 1962 and 1.1900.
The eagle indicator is in the negative zone, so any technical rebound will be considered an opportunity to sell. The key to our bearish strategy is to sell as long as the pound sterling does not break above the 1.21 level.
