Previously around 61.8% - 50% Fibonacci levels depicted on the chart, a Shooting Star daily candlestick occurred. A valid SELL position was suggested then and it got triggered few days later. The market successfully pushed below 1.6100 shortly after.
Bullish rejection was once expressed when the market pushed below 1.6100 and 1.6060 on September 9. However, another bearish leg dipped further below 1.6060 during the current month.
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 where considerable bearish pressure was applied many times.
Note the bullish breakout off the depicted bearish channel on the daily chart. However, since then, the pair has been moving sideways within this congestion zone.
Daily fixation above price levels of 1.5870 and 1.5945 was essential to pursue towards further targets initially around 1.6140 and 1.6300.
On the other hand, daily closure below 1.5870 puts further bearish pressure on the pair to reach price zone of 1.5800-1.5830 where the backside of the broken channel is now located.
4H chart reveals long period of downside movement roughly maintained within the limits of the depicted channel.
Last week, 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.
A low risk BUY entry can be taken around 1.5830-1.5800 with Stop Loss located just below 1.5770. Bullish target is located around the upper limit of the congestion zone around 1.6140.
A higher-risk BUY position can also be offered after fixation above 1.5950 occurs.
The material has been provided by InstaForex Company - www.instaforex.com
