Evident bullish recovery emerged from the area around 1.4550 where a significant bullish engulfing weekly candlestick was expressed.
Shortly after, persistence above the levels of 1.5000-1.5080 exposed the weekly key zone of 1.5500-1.5550 where significant bearish pressure was previously applied on February 22.
Last month, the market has been pushed above this weekly key zone at 1.5550 in an attempt to reach the area around 1.5900 (100% Fibonacci Expansion) which provided evident supply for the GBP/USD pair.
As anticipated, a bearish pullback was initiated towards 1.5550 that should be watched for a bullish price action (the current weekly candlestick closure should be monitored by the end of this week).
A bearish breakout of the depicted bullish channel took place as a result of the bearish pressure around 1.5780 and 1.5660 (bearish engulfing candlesticks and lower highs).
After a bearish breakout of 1.5500-1.5550 (lower limit of the broken channel), the market failed to gather enough bearish momentum towards the intraday demand level of 1.5100.
Significant bullish pressure was observed around 1.5200. Hence, a bullish swing was established towards 1.5780 (61.8% Fibonacci level) and 1.5880 (FE 100%).
As anticipated, the price zone of 1.5800-1.5880 remains a significant supply zone for the GBP/USD pair. It offered a valid sell entry last week. S/L should be lowered to 1.5680. All T/P levels were successfully reached.
On the other hand, the current price level at 1.5550 constitutes a significant demand level for the pair (corresponding to 50% Fibonacci level and a previous prominent top).
It should be watched for a valid buy entry if signs of bullish rejection are expressed on the H4 chart. Initial bullish target would be located at 1.5680-1.5700.
On the other hand, DAILY closure below 1.5500 is an early sign to exit the previously mentioned BUY entries with small losses (without waiting for the weekly closure).
The material has been provided by InstaForex Company - www.instaforex.com