Technical Market Overview:

The GBP/USD pair has broken down from the narrow range between the levels of 1.2342 - 1.2282 and made a fresh new low at the level of 1.2206, just 10 pips above the 61% Fibonacci retracement located at the level of 1.2196. The technical support at the level of 1.2231 had been violated as well and the Bullish Engulfing pattern has been made. Please notice, the market conditions are now extremely oversold and the RSI is showing a negative and weak momentum, so the bounce might continue higher, but the level of 61% Fibonacci can not be violated.

Weekly Pivot Points:

WR3 - 1.2628

WR2 - 1.2566

WR1 - 1.2402

Weekly Pivot - 1.2333

WS1 - 1.2163

WS2 - 1.2096

WS3 - 1.1935

Trading Recommendations:

The best strategy for current market conditions is to trade with the larger timeframe trend, which is down. All upward moves will be treated as local corrections in the downtrend. In order to reverse the trend from down to up, the key level for bulls is seen at 1.2505 and it must be clearly violated. The key short-term technical support is seen at the level of 1.2231 - 1.2224 and the key short-term technical resistance is located at the level of 1.2381. As long as the price is trading below this level, the downtrend continues towards the level of 1.1957 and below.