Many previous lows were established around 1.5550 where the GBP/USD pair found temporary DEMAND in November 2014. A bearish breakout was expressed after many unsuccessful attempts back in 2014.
A bearish breakout scenario similar to what happened back in October was successfully executed shortly after. The final bearish target was expected to be around price level of 1.5140.
The market has already pushed further below this level 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 successive bullish hammer daily candlesticks. This is supported by the positive UK Manufacturing production data that emerged last week.
The price level of 1.5100 has been defended by bulls since the start of 2015. Bullish fixation above 1.5130-1.5180 is mandatory to maintain the current corrective movement towards 1.5400.
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 exposed lower targets directly. Bears have already reached the price level of 1.5050 that has not been hit since August 2013.
For RISKY traders, LONG entries was suggested around the price level of 1.5100. Stop Loss to be located below 1.5025.
It is running in profits now (+80 pips). The bulls should defend the recent DEMAND zone located around 1.5160-1.5115 to pursue towards 1.5400.
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 to 50% Fibonacci level as well as the upper limit of the current movement channel.
The material has been provided by InstaForex Company - www.instaforex.com
