Few months ago, the market was pushed above the 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 towards the level of 1.5550 took place. Temporary bearish breakout below the GBP/USD key level at 1.5500 took place on July 5.
Last week, strong bearish pressure was applied to the level of 1.5550 again. It was broken down temporarily until the last week when the weekly bullish engulfing candlestick was expressed.
Contradictory signals are coming from consecutive weekly candlesticks. This indicates market indecision above the price levels of 1.5500.
However, the previous weekly candlestick closure above 1.5500 hinders further bearish decline and enhanced the bullish side of the market initially towards 1.5670 (previous weekly high) and 1.5780 (61.8% Fibonacci level).
On the other hand, the current weekly candlestick should be monitored by the end of the current day to determine if the weekly closure persists above 1.5780 (Supply Level) or below.
The nearest demand level around 1.5200 will become exposed only if the GBP/USD bears manage to bring the market price below the level of 1.5500 again (low probability).
Previously, the zone of 1.5800-1.5880 acted as a significant supply. It offered a valid sell entry few weeks ago. All T/P levels were successfully reached.
On the other hand, the level of 1.5550, which corresponds to 50% Fibonacci level and a previous prominent top, was temporarily broken allowing further bearish decline towards 1.5350 where an ascending bottom was recently established.
The level of 1.5500 constitutes a significant KEY level to watch for. It corresponds to the short-term uptrend line depicted on the chart.
However, evident bullish pressure was applied at 1.5450 on August 7. A bullish engulfing daily candlestick was expressed by the end of the day.
The nearest supply/resistance levels to meet the GBP/USD pair are located around the price levels of 1.5770 (prominent 61.8% Fibonacci level) where bearish rejection should be anticipated.
The price reaction should be watched at retesting the price levels around 1.5770 (61.8% Fibonacci level) where a valid SELL entry was suggested yesterday. It is already running in profits now.
On the other hand, the bearish scenario towards 1.5470 and 1.5370 should only be anticipated if the GBP/USD bears manage to push again below 1.5500 (Fibonacci 50% level) successfully.
The material has been provided by InstaForex Company - www.instaforex.com