GBP/USD Price Analysis: Retreats from YTD tops, downside seems limited

• GBP/USD witnessed some profit-taking slide from YTD tops set earlier this Wednesday.
• The intraday pullback showed some resilience below the 1.3200 mark, favouring bulls.

The GBP/USD pair witnessed an intraday turnaround on Wednesday and retreated around 60 pips from the 1.3265 region, or YTD tops, albeit showed some resilience below the 1.3200 mark.

From a technical perspective, the pair on Tuesday broke through over one-week-old descending channel. The mentioned channel constituted the formation of a bullish flag pattern on short-term charts. The subsequent strong positive move confirmed a fresh bullish breakout. This, in turn, paved the way for an extension of the recent upward trajectory witnessed over the past 1-1/2 month or so.

However, overbought conditions on the daily chart prompted bulls to take some profits off the table amid some repositioning trade ahead of Wednesday's release of the latest FOMC meeting minutes. Meanwhile, oscillators on the 4-hourly chart have already eased from the overbought zone and support prospects for the emergence of some dip-buying, which should help limit any meaningful slide.

Immediate support is pegged near the previous monthly swing high, around the 1.3185 region and is followed by the 1.3150-40 region, which should now act as a strong base for the major. That said, some follow-through weakness might prompt some technical selling and accelerate the corrective slide back towards the channel resistance breakpoint, around the 1.3115-10 region.

On the flip side, the 1.3265 region now seems to have emerged as an immediate resistance, which is closely followed by December 31 swing highs, around the 1.3285 zone and the 1.3300 mark.

GBP/USD 4-hourly chart

Technical levels to watch