Last month, the market was pushed above this weekly key-zone around 1.5550 in an attempt to reach the area around 1.5900, which provided evident supply for the GBP/USD pair.
As anticipated, a bearish pullback was executed towards the level of 1.5550. A bearish breakout below 1.5500 took place two weeks ago.
Contradictory signals are coming from consecutive weekly candlesticks. It indicates a lack of bearish momentum below 1.5500.
The current weekly candlestick closure above 1.5500 hinders further bearish decline and enhances the bullish side of the market at least towards 1.5770 (61.8% Fibonacci level).
Last week, strong bearish pressure has been applied against the price level of 1.5550. It was breached temporarily until bullish recovery emerged this week.
On the other hand, the nearest demand level around 1.5200 will become exposed if GBP/USD bears manage to keep their WEEKLY closure below the level of 1.5500.
Previously, the price zone of 1.5800-1.5880 acted as a significant supply zone. It offered a valid sell entry few weeks ago. All T/P levels were successfully reached.
On the other hand, the level at 1.5550 (corresponding to 50% Fibonacci level and a previous prominent top) was broken temporarily allowing further bearish decline towards 1.5350 where an ascending bottom had been recently established.
Last week, strong bullish price actions have been expressed. A bullish pullback towards 1.5600 has been taking place. The level of 1.5550 was breached during last week's consolidations.
However, Thursday's candlestick came as a bearish engulfing one which still enhances the bearish side of the market.
That is why, the price level of 1.5550 now constitutes a significant key level to be watched for significant bearish price action.
A quick bearish decline towards 1.5470 and 1.5370 should be expected if 1.5550 gets broken again.
On the other hand, the price level of 1.5770 (61.8% Fibonacci level) is the next supply level to be watched if bullish fixation above 1.5550 persists on a daily basis.
If so, a counter-trend Intraday SELL entry can be offered at retesting of the price level of 1.5770.
The material has been provided by InstaForex Company - www.instaforex.com