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 has been providing the GBP/USD pair with significant resistance.
The previous weekly candlestick closure above 1.5500 hindered a further bearish decline enhancing the bullish side of the market towards 1.5670 (previous weekly high) and 1.5780 (61.8% Fibonacci level).
However, recent weekly candlesticks came as bearish engulfing candles, closing below the level of 1.5450 (neckline of the Head and Shoulders pattern).
It supported the bearish side of the market in the long term. An approximate projection target should be located at the level of 1.5050 for a reversal pattern.
In the short term, the nearest demand level is seen around 1.5170 (intraday demand level and the origin of a previous bullish engulfing weekly candlestick) provided the pair with significant bullish rejection two weeks ago.
It is expected to be visited again if persistence below the level of 1.5350 (previous weekly bottom) is maintained on a weekly basis.
On the other hand, consolidation above 1.5350 hinders further bearish movement giving time for a bullish correction, which extended up to the levels of 1.5500 during last week's consolidation.
The previous bearish movement found its way towards the level of 1.5200 (prominent demand level), which prevented further bearish decline.
Instead of it, the evident bullish candlestick took place around 1.5200-1.5170 (resulting in bullish engulfing daily candlesticks) leading to the recent bullish pullback towards 1.5600 (the backside of the depicted uptrend). It applied significant bearish pressure to the GBP/USD pair.
The price zone of 1.5500-1.5550 remains a significant supply zone to offer valid sell entries. Yesterday, it offered one more valid sell entry, which is running in profits now.
A daily fixation below 1.5350 is currently needed to allow the current bearish movement to continue towards the levels of 1.5150 (previous prominent weekly bottoms) and 1.5000 (weekly demand level).
Trading Recommendation:
Traders were instructed to sell the GBP/USD pair in the zone around 1.5500-1.5530.
S/L should be lowered to 1.5360 to secure some profits. Remaining target levels are located at 1.5250 and 1.5160.
On the other hand, a low-risk buy entry can be offered around the weekly demand level of 1.5000 (if a bearish breakdown of both demand level of 1.5150 occurs soon). S/L should be placed below 1.4930.
The material has been provided by InstaForex Company - www.instaforex.com