The GBP/USD pair finds some support near the very important 200-day SMA and stalls the previous day's retracement slide from its highest level since June 17. Spot prices, however, struggle to gain any meaningful traction and seesaw between tepid gains/minor losses around the 1.2200 mark through the mid-European session.

From a technical perspective, the overnight failure near a resistance marked by the top end of over a two-month-old ascending channel could be seen as the first sign of bullish exhaustion. The lack of follow-through selling, however, warrants some caution before confirming that the GBP/USD pair might have formed a near-term top and positioning for any meaningful corrective downfall.

In the meantime, the daily swing low, around the 1.2160-1.2155 area, could act as immediate support ahead of the 200 DMA, currently around the 1.2135 region. This is followed by the 1.2100 mark, which if broken decisively will make the GBP/USD pair vulnerable to weaken further to the 1.2000 psychological mark. The downward trajectory could get extended to the 1.1935-1.1930 horizontal support.

On the flip side, any meaningful intraday positive move might confront hurdle near the 1.2250-1.2255 zone, above which the GBP/USD pair could reclaim the 1.2300 mark. Some follow-through buying should allow bulls to aim back to the multi-month peak, around the 1.2345 area touched on Monday. Spot prices could eventually climb to the trend-channel barrier, currently around the 1.2400 mark.

The pair is correcting inside a bullish channel. The instrument is going above the Ichimoku Cloud, which suggests an uptrend. A test of the upper border of the Cloud at 1.2045 is expected, followed by growth to 1.2735. An additional signal confirming the growth will be a bounce off the lower border of the bullish channel. The scenario can be cancelled by a breakaway of the lower border of the Cloud and securing under 1.1865, which will mean further falling to 1.1775.

Take Buying Position Above the H4 Degree TL

Dec 06 2022