Early in the American session, the British pound is trading at 1.2492 around the 21 SMA located at 1.2488 and within a downtrend channel formed on the 1-hour chart.
In case the British pound breaks above the psychological level of 1.25, we could expect it to resume its bullish cycle. For this, it should consolidate above 1.2525, which represents a one-month high. Then, the instrument could reach 7/8 of Murray at 1.2573.
On the other hand, if the British pound falls below 1.2488 (21 SMA), we could expect a bearish movement towards the 6/8 Murray located at 1.2451. Finally, with a break below this level, the price could reach the 200 EMA located at 1.2356.
The eagle indicator in the European session reached the extremely overbought zone around 95 points. Thus, as long as GBP/USD trades below 1.2525, any technical bounce could be seen as a signal to sell.
In case the pound sterling resumes its bullish cycle, we should buy above 1.2525. We should avoid selling as the bullish move would nullify our selling strategy.
Our trading plan for the next few hours is to sell the British pound below 1.2488 (21 SMA) with targets at 1.2451 (6/8) and 1.2358 (200 EMA). The eagle indicator is giving a negative signal which supports our bearish strategy.
