REFILE-BUZZ-COMMENT-Sterling's oversold condition continues to unwind

Corrects GBP/GBP to GBO/USD in first paragraph

Jan 22 (Reuters) - Sterling is caught between reversal potential versus the dollar and an extending EUR/GBP bull trend, but the daily and weekly charts suggest there maybe scope for GBP/USD to change direction this week.

A potential weekly bullish engulfing candlestick signal added to Monday's daily engulfing line could be a warning that the 1.3434 to 1.2100 September-January bear trend could be due a sizeable correction or even full-blown trend reversal.

Engulfing lines are a two-candle pattern where the second candle's real body (shaded area between the open and close) completely engulfs the previous session's real body. In a bear trend the second candle would have a bullish real body; buying pressure has overwhelmed selling pressure.

The weekly relative strength indicator is unwinding, having based at over sold levels around 29.00- and fourteen-day negative momentum is fading.

GBP/USD upside targets include the 1.2575 high from January 7 and Fibonacci retracement levels taken off the 1.2616 to 1.2100 and 1.2810 to 1.2100 drop. The retracement points are at 1.2419 and 1.2455, respectively.

A drop under the 10-day moving average line at 1.2258 could negate the reversal and a move below the 1.2100 January low could trigger a bear trend resumption.

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(Peter Stoneham is a Reuters market analyst. The views expressed are his own)

((peter.stoneham@thomsonreuters.com))