Early in the American session, the British pound is trading around 1.271, testing the bottom of the uptrend channel formed since December 12 and showing a strong technical correction, having reached the high of 1.2827, a level that coincided with the +1/8 Murray line. Meanwhile, a strong technical reversal is underway.
The daily pivot point is around 1.2760 and the 21 SMA is around 1.2747. This means that the pound is under bearish pressure. If there is a sharp break of the trend channel and a consolidation below the 8/8 Murray, we could expect a bearish acceleration and GBP/USD could reach the 200 EMA located at 1.2596.
On the other hand, if the British pound bounces above 1.2710 in the coming hours, GBP/USD is expected to rebound to the 1.2747 and 1.2760 levels. In case this scenario occurs and if the British pound fails to consolidate above 1.2770, a strong technical correction is likely to occur and could be seen as a signal to sell.
If the British pound consolidates above the pivot point of 1.2760, we could expect that it will continue to rise in the coming days and could return to overbought levels and the high of 1.2827.
Since December 22, the eagle indicator has been showing a negative signal. In case any technical bounce occurs and as long as GBP/USD trades below 1.2817, this will be seen as an opportunity to sell in the short term.
