Few months ago, the market was pushed above the weekly key zone around 1.5550 in an attempt to reach the area around 1.5900, which has been providing evident supply for the GBP/USD pair.
Last week, strong bearish pressure was applied to the level of 1.5550 again. It was broken down temporarily until the last week when the weekly bullish engulfing candlestick was expressed.
For a few weeks, contradictory signals were coming from consecutive weekly candlesticks indicating market indecision above the price levels of 1.5500.
However, the previous weekly candlestick closure above 1.5500 hindered further bearish decline and enhanced the bullish side of the market initially towards 1.5670 (previous weekly high) and 1.5780 (61.8% Fibonacci level).
On the other hand, the current weekly candlestick should be monitored by the end of the day to determine if the weekly closure persists below 1.5450 (Demand Level) or not.
The nearest demand level around 1.5200 remains exposed as long as the GBP/USD bears manage to keep moving below the level of 1.5450.
Previously, the zone of 1.5800-1.5880 acted as a significant supply. It offered a valid sell entry few weeks ago. All T/P levels were successfully reached.
On the other hand, the level of 1.5550, which corresponds to 50% Fibonacci level and the previous prominent top, was temporarily broken allowing further bearish decline towards 1.5350 where an ascending bottom was recently established.
The level of 1.5500 constituted a significant key level to watch for. It corresponded to the uptrend line depicted on the chart.
The nearest supply/resistance levels for the GBP/USD pair are located around the levels of 1.5770 (prominent 61.8% Fibonacci level) where the last limb of the Head and Shoulders pattern was originated.
Thus, a valid sell entry was suggested for retesting of 1.5770 on Monday. The position is already running in profits now.
Moreover, the bearish movement towards 1.5330 and 1.5200 should be expected especially if the market keeps trading below the price level of 1.5480.
The material has been provided by InstaForex Company - www.instaforex.com