Overview:
The GBP/USD pair has been moving downwards respecting the depicted downtrend line since July 15 when the ongoing downtrend was initiated.
Many bearish impulses were previously initiated around 1.7180, 1.6630, and 1.6400 where the downtrend line came to meet the pair then.
The price zone of 1.6060 - 1.6090 constituted a transient daily support that paused the bearish movement for a few days since September 9. However, bears quickly managed to push below reaching down to 1.5890 (depicted on the chart).
Price level of 1.5890 provided a solid daily support level that provided evident bullish recovery. A bullish engulfing daily candlestick is manifested on the chart.
Recently, bulls have pushed above the downtrend line. Bullish breakout off the downtrend line as well as an inverted bullish Head and Shoulders are already manifest on the chart.
Bullish fixation above 1.6060 was essential to maintain the bullish scenario. However, the bears have failed to do so. Instead, the market is moving again towards the backside of the broken trend line once again.
The 4H chart shows a Flag pattern after a strong bearish impulse initiated off 1.6150. This is a continuation pattern. However, price levels around 1.5940 remains a strong intraday support corresponding to multiple daily lows (Thursday and Friday).
Trading recommendations:
Price action should be watched near the previous daily lows around 1.5950.
A valid buy entry can be taken if significant bullish rejection is expressed. Until now, the market is showing hesitance especially after the two -Doji- daily candlesticks of both Thursday and Friday.
Bullish fixation above the price level of 1.6035 ( Thursday's highest level ) and 1.6075 confirms our suggested bullish position. The bullish target would be located around 1.6150 initially.
The material has been provided by InstaForex Company - www.instaforex.com
