GBP/USD Price Analysis: Bulls in full control near 2-week tops, around mid-1.2300s

• GBP/USD caught some aggressive bids on Tuesday and rallied to two-week tops.
• The strong momentum took along some stops near 1.2200 mark and 50-day SMA.
• Overbought conditions on hourly charts warrant some caution for bullish traders.

The GBP/USD pair continued scaling higher through the mid-European session and rallied to fresh two-week tops in the last hour. A sustained move beyond the 1.2200 confluence resistance turned out to be a key factor that prompted some aggressive short-covering move.

The mentioned levels comprised of 23.6% Fibonacci level of the 1.2644-1.2075 and 100-hour SMA. A subsequent breakthrough 50-day SMA barrier, around the 1.2265-70 region, and the 38.2% Fibo. level near the 1.2300 mark further fueled the strong intraday momentum.

The pair was last seen trading near the top end of its daily trading range, around mid-1.2300s. Meanwhile, technical indicators on hourly charts are already flashing extremely overbought conditions and should keep a lid on any further gains for the GBP/USD pair.

This coupled with the fact that oscillators on the daily chart are yet to gain any meaningful traction further warrant some caution for bullish traders. Hence, it will be prudent to wait for near-term consolidation before traders start positioning for the next leg up.

On the flip side, any meaningful pullback towards the 1.2300 round-figure mark will now be seen as an opportunity to initiate fresh bullish positions. This, in turn, should help limit the downside near the 50-day SMA strong resistance breakpoint, around the 1.2265-70 area.

GBP/USD 1-hourly chart

Technical levels to watch