The previous consolidation movement extended between the price levels of 1.5550 and 1.5770. It represented a period of indecision on the market after such a long bearish rally that started off 1.7100 and 1.6500.
Bearish breakout below 1.5550 directly exposed lower targets. Bears have already pushed towards the price levels of 1.5050 and 1.4960 which have not been visited since July 2013.
As mentioned in the previous articles, conservative traders should have been waiting for the current bullish pullback towards the recent SUPPLY zone around 1.5280-1.5320 for a low-risk SELL entry.
This SUPPLY zone also corresponds to the upper limit of the depicted daily channel where bearish pressure was anticipated last week on Thursday at retesting.
However, this bearish scenario was threatened on Thursday after the daily closure above the upper limit of the consolidation zone as well as the depicted channel around 1.5250.
Moreover, a bearish engulfing daily candlestick was expressed on Friday. This has pushed the GBP/USD pair again inside the channel.
On January 8, the GBP/USD pair has shown initial bullish recovery off the price level of 1.5050. Since then, the pair was trapped within a consolidation zone ranging between 1.4960 and 1.5230 until Thursday when the pair achieved daily closure above them.
The price level of 1.5280 corresponds to the upper limit of the depicted H4 channel as well as 50% Fibonacci level of the recent bearish swing that extended between 1.5600 and 1.4976.
As suggested, the price zone of 1.5280-1.5320 offered a low-risk SELL entry by the end of the last week with Stop loss located above 1.5360 (61.8% Fibonacci level). SL can now be lowered to 1.5280 to offside some of the risk.
On the other hand, DAILY closure above 1.5340 invalidates the short-term bearish scenario exposing the price level of 1.5480 for retesting.
The material has been provided by InstaForex Company - www.instaforex.com
