Overview:
On March 2, a bearish breakout of the lower limit of the previous daily channel occurred enhancing the bearish side of the market.
Persistence below the zone between 1.4950 and 1.5000 indicated a further bearish decline towards 1.4700.
Shortly after, the bearish trend was resumed towards the level of 1.4550 where a lower daily bottom was established.
Evident bullish recovery emerged at 1.4560 pushing the GBP/USD pair above the level of 1.4700. Then higher highs were hit.
As anticipated, the daily closure above 1.5060 exposed the next resistance levels at 1.5400 and 1.5450 where extensive bearish pressure was previously applied.
This enhanced the bearish side of the market towards the levels of 1.5300, 1.5250, and 1.5100 where the most recent bullish swing was initiated on May 5.
On the other hand, the price zone of 1.5750-1.5800 (critical resistance zone) offered a valid sell entry almost one month ago. The final bearish target at 1.5450 was reached.
Moreover, a lower high at 1.5660 applied significant bearish pressure. That is why the support zone between 1.5500 and 1.5450 failed to stop this bearish momentum. This led to a bearish breakout.
The recent daily candlesticks came as bullish engulfing ones. This hindered a further bearish decline and allowed the occurrence of the current bullish pullback towards the price zone of 1.5550-1.5600.
Traders can take a valid sell entry anywhere around 1.5600 (the key-zone depicted on the chart). Initial T/P levels are located at 1.5380 and 1.5200 while S/L should be set above 1.5670.
On the other hand, yesterday's candlestick closure above 1.5550 hinders this bearish position.
A bullish corrective movement towards 1.5750 is considered possible if the current bullish breakout above 1.5550 persists.
On the other hand, the price level of 5750 is where the next weekly resistance is located.
The material has been provided by InstaForex Company - www.instaforex.com