Early in the American session, the British pound (GBP/USD) reached the technical reversal zone around +1/8 Murray located at 1.2817. We can also see on the 4-hour chart that the pound is trading within an uptrend channel formed since June 28.
We can see that the GBP/USD pair has touched the top of the uptrend channel and a technical correction is expected in the next few hours because this level represents strong resistance.
Weaker-than-expected NFP data helped the British pound rally and it is now approaching the key 1.28 level. If the pound consolidates above 1.2830 in the next few days, we could expect an advance of the upward movement and GBP/USD could reach +2/8 Murray located at 1.2939 and even the psychological level of 1.30.
On the 1-hour chart, the eagle indicator reached the overbought zone. Alongside the top of the uptrend channel, this could mean a technical correction in the British pound. So, GBP/USD is expected to fall towards the level of 1.2721 (21 SMA) and even to tumble to the 200 EMA located at 1.2626.
Our trading plan for the next few hours is to sell the British pound below 1.2790 with targets at 1.2721 and 1.2626. With a daily close above 1.2817 (+1/8 Murray), we should avoid selling and it could serve as a stop-loss level.
