Weekly Chart:
Few months ago, the market was pushed above the weekly key zone around 1.5550 in an attempt to reach the area of 1.5900, which provided significant bearish resistance.
Recent weekly candlesticks came as bearish engulfing candles closing below the level of 1.5220 (the neckline of the Head and Shoulders pattern). This supported the bearish side of the market in the long term.
A quick bearish decline towards the previous weekly level of 1.4950 was expected as a result of the bearish breakdown below 1.5200.
Extensive bearish pressure has been applied to many demand levels located at 1.4620, 1.4360, and 1.4220. All of them have been broken to the downside.
Currently, the GBP/USD pair looks oversold as it is being pushed further below the prominent demand levels at 1.4620, 1.4360, and 1.4220.
The next demand zone to meet the GBP/USD pair is located around 1.3840-1.3660, which corresponds to previous bottoms established back in May 2009.
That is why any signs of bullish rejection around the next demand level of 1.3840 should be considered a valid buy signal.
The material has been provided by InstaForex Company - www.instaforex.com