GBP/USD corrects from 1-1/2 week tops and momentarily slips below 1.2200 mark.

The set-up warrants some caution before positioning for further intraday downfall.

The GBP/USD pair failed to capitalize on its early uptick to near two-week tops and for now, seems to have faced rejection near the 1.2300 mark. The mentioned handle marks a confluence barrier comprising of 100-period SMA on the 4-hourly chart and 50% Fibonacci level of the 1.3200-1.1412 steep decline.

Given that oscillators on the daily chart are yet to catch up with the recent recovery move from 35-year lows, investors seemed reluctant to place fresh bullish bets. This coupled with slightly overbought conditions on hourly charts prompted some profit-taking amid a modest pickup in the USD demand.

The pair retreated back below the 1.2200 round-figure mark, albeit has still managed to hold above the Asian session swing lows. The set-up warrants some caution before confirming that corrective bounce might have already run out of the steam and positioning for any further intraday depreciating move.

The mentioned low, around the 1.2130 region, is closely followed by support near the 1.2100 round-figure mark. The latter coincides with 38.2% Fibo. level, which if broken might be seen as a key trigger for bearish traders and drag the pair further towards testing its next major support near mid-1.2000s.

The pair then might extend the downward trajectory further towards the key 1.20 psychological mark before eventually dropping back to the overnight strong horizontal resistance breakpoint, now turned support near the 1.1950-40 region.

On the flip side, the 1.2245-50 region now seems to act as an immediate resistance, above which the pair is likely to make a fresh attempt towards surpassing the 1.2300 mark. Some follow-through buying will reinforce a near-term bullish trend and lift the pair further towards the 1.2400 round-figure mark.

GBP/USD 4-hourly chart

Technical levels to watch