Previously, the GBP/USD pair had temporary DEMAND around 1.5550 where many previous lows were established within a congestion zone in November 2014.
A bearish breakout was expressed after successive unsuccessful attempts back in 2014.
A bearish flag pattern is obvious on the daily chart, similar to what happened back in October.
The final bearish target was expected to be around price level of 1.5140. This target was already bypassed on Friday reaching the lower limit of the depicted bearish channel around 1.5050.
Currently, the GBP/USD pair is showing bullish recovery off the price level of 1.5050 which is manifested in the bullish hammer daily candlesticks. This is supported by the positive UK Manufacturing production data that emerged on Friday.
Bullish fixation above 1.5100 is mandatory to maintain the current corrective movement. Price level of 1.5100 has been defended by bulls since 2015 started.
Consolidation movement range between the price levels of 1.5770 and 1.5550 represented the state of indecision on the market after such a long bearish rally that started off 1.7100 and 1.6500.
As anticipated, the bearish breakout below 1.5550 directly exposed lower targets. The bears have already reached the price level of 1.5050 that has not been hit since August 2013.
Risky traders can look for BUY entries around price level of 1.5100. Targets would be located around 1.5400, 1.5480 and 1.5550. Stop Loss to be located below 1.5025.
Conservative traders should wait for a bullish pullback towards the recent SUPPLY zone around 1.5480-1.5550 for a low-risk SELL entry. The stop loss should be located above 1.5560.
Note that the price level of 1.5480 corresponds with 50% Fibonacci level as well as multiple previous bottoms established back in December.
The material has been provided by InstaForex Company - www.instaforex.com
