Previously around 61.8% - 50% Fibonacci levels depicted on the chart, obvious bearish pressure was expressed. A short position was suggested then and it got triggered few days later. The market successfully pushed below 1.6100 shortly after.
Bullish recovery was expressed off price levels of 1.5940 and 1.5880. Bullish engulfing daily candlesticks emerging off these levels are depicted on the chart.
On the other hand, the price zone of 1.6100-1.6140 constituted a prominent SUPPLY zone. Since then, the pair has been moving sideways with some bearish tendency.
Despite the bullish breakout off the depicted bearish channel on the daily chart, bulls have failed to fixate above price levels of 1.5870 and 1.5945.
Instead, daily fixation below 1.5870 ( Note Yesterday's full body bearish daily candlestick ) put further bearish pressure on the pair to reach 1.5780 then 1.5700 where bullish recovery should be anticipated.
4H chart reveals long period of downside movement roughly maintained within the limits of the depicted channel.
Two weeks ago, bulls managed to push beyond the upper limit of the channel. However, the GBP/USD pair was trapped between the backside of the channel (1.5860) and price level of 1.6140.
Yesterday, bears managed to break below the recent low around 1.5790. This exposes a potential target at 1.5700 where the backside of the broken channel is roughly located.
On the other hand, bullish fixation above 1.5830 and 1.5870 is needed to pause the ongoing bearish momentum.
It's advisable for conservative traders to wait for further price action near 1.5800-1.5820.
Be careful the current bearish movement maybe a bearish trap.
The material has been provided by InstaForex Company - www.instaforex.com
