A 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.
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. An approximate target should be located at the level of 1.4800 for this reversal pattern.
The previous demand level at 1.5200 (the origin of a previous bullish engulfing weekly candlestick) was broken down two weeks ago. The bearish tendency was confirmed with the Shooting-Star bearish weekly candlestick of the last week.
Bearish persistence below 1.5200 on a weekly basis enhances a quick bearish decline towards the weekly demand level of 1.4950.
The previous bearish movement found its way towards the level of 1.5200 (prominent demand level), which prevented the further bearish decline.
Instead of it, an evident bullish reaction was performed around 1.5200-1.5170 (resulting in bullish engulfing daily candlesticks).
This led to the previous bullish pullback towards 1.5600 (the backside of the depicted uptrend). It placed the GBP/USD pair under significant bearish pressure.
The demand levels of 1.5350 and 1.5200 were broken down a few weeks ago. Currently, these levels constitute prominent supply to be watched for new sell entries.
The key level of 1.5200 was temporarily breached to the upside last week until a daily bearish engulfing candlestick was expressed on Friday.
Note that bearish persistence below 1.5200 enhances further bearish decline towards next demand levels of 1.5090, 1.5025, and 1.4950.
Trading Recommendation:
Risky traders were advised to sell the GBP/USD pair anywhere around 1.5350. S/L can be lowered to 1.5250 to secure profits.
For conservative traders, a low-risk buy entry will probably be offered around the weekly demand levels of 1.5000-1.4950. S/L should be placed below 1.4920. Initial T/P levels should be located at 1.5170 and 1.5300.
The material has been provided by InstaForex Company - www.instaforex.com