On January 21, after the GBP/USD pair moved below 1.4340, evident signs of a bullish recovery were expressed around 1.4075. Hence, the previous weekly candlesticks closed above 1.4340 again.
Bullish persistence above 1.4500 was mandatory to maintain enough bullish strength in the market.
However, as the previous weekly candlesticks maintained their bearish persistence below the depicted demand zone (below 1.4340), the next demand level located at 1.3845 (historical bottom that goes back to March 2009) provided a significant bullish rejection on February 26.
As expected, an evident bullish recovery and a bullish engulfing weekly candlestick were expressed around 1.3850 (a prominent weekly demand level) where a significant bullish swing was initiated on March 1.
Recently, the price zone of 1.4340-1.4500 has been a significant supply zone during the past few weeks.
That is why a bearish rejection should be expected again around the current supply zone of 1.4340-1.4500. The nearest destination for the GBP/USD pair would be located at 1.3845.
A lower high was recently achieved around the level of 1.4530. This applied extensive bearish pressure against the price level of 1.4340.
Hence the GBP/USD pair looked oversold when the previous bearish decline extended below 1.4040 (temporary support).
That is why, signs of a bullish recovery and a profitable long entry were suggested around 1.3850. A recent bullish swing was expressed towards the price levels around 1.4400.
The price zone of 1.4340-1.4500 constituted a significant supply zone where the depicted the Head and Shoulders reversal pattern was expressed. Estimated bearish targets were located at 1.4060, 1.3960, and 1.3800.
On April 7, the market failed to push below the price level of 1.4050. Hence a bullish movement was executed again towards the price levels of 1.4340 and recently 1.4500.
This week, daily persistence below 1.4500 (79.6% Fibonacci level) and 1.4340 (61.8% Fibonacci level) will be needed to enhance further bearish decline towards 1.3950 and 1.3800.
Otherwise, the GBP/USD pair may extend up to the price level of 1.4680 (100% Fibonacci level) before further bearish decline can occur.
The material has been provided by InstaForex Company - www.instaforex.com