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. Recent bearish breakout took place this week.
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 both Yesterday and Wednesday's full body bearish daily candlesticks ) put further bearish pressure on the pair to reach 1.5780, 1.5700 and 1.5650 where the back side of the mentioned bearish channel is located.
Generally, bullish recovery should be anticipated after such a strong bearish momentum.
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.
This week, the bears managed to break below the recent low around 1.5790. This exposes a potential target at 1.5700 and 1.5650 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. Note that the current bearish movement maybe a bearish trap as the pair looks oversold on the 4H chart.
Conservative traders should wait for a pull-back towards 1.5800-1.5820 for a possible SELL entry.
On the other hand, risky traders can benefit of the current low prices and take a BUY position around the current prices with tight stop loss ( DAILY closure below the entry levels ).
The material has been provided by InstaForex Company - www.instaforex.com
