Finds some support near 38.2% Fibo./descending channel confluence region

GBP/USD edged lower on Wednesday and retreated further from two-week tops.
The technical set-up supports prospects for the emergence of some dip-buying.

The GBP/USD pair stalled its overnight strong bullish momentum near the 50% Fibonacci level of the 1.2644-1.2076 recent downfall and witnessed a modest pullback on Wednesday. The retracement slide dragged the pair further below the 1.2300 round-figure mark during the early European session, with bears now flirting with 38.2% Fibo. level support.

The mentioned level coincides with the lower end a downward sloping channel on intraday charts. Given the overnight strong upsurge, the channel seemed to constitute towards the formation of a bullish flag chart pattern. The technical set-up supports prospects for the emergence of some dip-buying, warranting some caution for aggressive bearish traders.

Meanwhile, technical indicators on the daily chart have been recovering from the bearish territory and have also eased from overbought conditions on the 4-hourly chart. This makes it prudent to wait for some strong follow-through selling before confirming that bulls might have already run out of the steam and positioning for any further intraday downfall.

That said, a convincing breakthrough the mentioned confluence support will negate the constructive outlook and prompt some technical selling. The pair might then accelerate the slide back towards 50-day SMA resistance breakpoint, near the 1.2270-65 area. The downward trajectory could further get extended towards 23.6% Fibo. level around the 1.2200 mark.

On the flip side, the 1.2315-20 region now seems to act as immediate resistance and is closely followed by the trend-channel barrier, around the 1.2335 region. A sustained strength beyond the said hurdle will reinforce the bullish set-up and has the potential to lift the pair further towards reclaiming the 1.2400 round-figure mark.