In June 2015, the pair pushed above the depicted level of 1.5550 trying to reach the zone of 1.5900 where the depicted Head and Shoulders pattern was formed.
In November 2015, a bearish engulfing weekly candlestick closed below the level of 1.5200 (the neckline of the Head and Shoulders pattern). This enhanced the bearish side of the market in the long term.
Extensive bearish pressure has been applied against the demand levels of 1.4620 and 1.4360. Both of them were broken to the downside.
Shortly after the GBP/USD pair moved below 1.4220, evident signs of bullish recovery were expressed around 1.4075. Hence, the previous few weekly candlesticks closed above 1.4220 and 1.4360 again, indicating strong bullish demand.
Bullish persistence above 1.4360 was mandatory to maintain enough bullish strength in the market. The first bullish target was seen at 1.4615.
Signs of bearish rejection were manifested around 1.4615 as it corresponded to a broken weekly demand level, which is acting as a strong supply level now.
On the other hand, the price zone of 1.4360-1.4220 remains a significant demand zone to be watched for a possible BUY entry similar to what happened last week.
On February 4, the market failed to close above 1.4615. Instead, an inverted hammer daily candlestick was expressed. Hence, a bearish pullback took place towards 1.4360.
Later on February 8, the market expressed significant bullish rejection around 1.4360.
This led to a quick bullish swing towards 1.4570 where recent bearish pressure was applied. Hence, another bearish pullback towards 1.4360 was performed last week.
Note that the GBP/USD pair remains trapped between 1.4615 and 1.4360 (the recent daily uptrend) until a breakout occurs in either direction. These levels are important key levels that determine the next destination for the pair.
Note that a recent lower high was established around 1.4530 levels, which led to the ongoing bearish movement towards 1.4360.
Although the price level of 1.4360 stands as a prominent demand level for the GBP/USD pair, the depicted lower high creates extensive bearish pressure against it this time.
If a bearish breakdown of 1.4360 occurs today, a quick bearish decline towards 1.4220 will be imminent.
The material has been provided by InstaForex Company - www.instaforex.com