GBP/USD technical analysis: Overbought conditions prompt some profit-taking, corrects to 23.6% Fibo. level
- The GBP/USD pair stalled this week's strong recovery move from multi-month lows and quickly retreated around 40-50 pips from intraday tops - around the 1.2725 region.
- Slightly overbought conditions on hourly charts seemed to be the only factor prompting some profit-taking after the recent up-move of around 120-pips over the past three days.
The downside, however, remained cushioned, at least for the time being, and the pair now seemed to show some resilience near 23.6% Fibo. level of the 1.2506-1.2727 latest upsurge. This is followed by the 1.2645 confluence region - comprising of 200-hour SMA and 38.2% Fibo. level, which should now act as an important pivotal point for short-term traders.
Meanwhile, technical indicators on the daily chart are yet to catch up with the ongoing recovery momentum and might turn out to be one of the key factors holding investors back from placing any aggressive bets. Hence, it would be prudent to wait for follow-through move beyond the 1.2750-60 supply zone before positioning for any further appreciating move.
Failure to clear the mentioned barrier and a subsequent break below the 1.2645 confluence support would suggest that the corrective bounce might have already run out of the steam and the pair seems all set to resume its prior well-established bearish trend.
GBP/USD 1-hourly chart
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Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
