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 the GBP/USD pair with evident resistance.
The previous weekly candlestick closure above 1.5500 hindered further bearish decline and enhanced the bullish side of the market towards 1.5670 (previous weekly high) and 1.5780 (61.8% Fibonacci level).
However, recent weekly candlesticks came as bearish engulfing candles, closing below the level of 1.5450 (neckline of the Head and Shoulders pattern).
It supports the bearish side of the market in the long term. For the reversal pattern, an approximate projection target should be located at the level of 1.5050.
In the short term, the nearest demand level to meet the GBP/USD pair is located around 1.5170 (recent weekly bottom and the origin of a previous bullish engulfing weekly candlestick).
Weekly persistence below the price zone of 1.5170 (the current demand level) is mandatory to allow further bearish decline to occur.
On the other hand, persistence above it hinders the current bearish momentum giving time for more sideways consolidations.
Prominent supply/resistance around the level of 1.5770 (prominent 61.8% Fibonacci level) where the right shoulder of the depicted bearish reversal pattern is observed.
That is why, a valid sell entry was suggested for retesting at 1.5770 one month ago. All of its targets were successfully achieved.
Moreover, the previous bearish movement found its way towards the level of 1.5200 (prominent demand level), which prevented further bearish decline.
Instead of it, evident bullish candlestick existed around 1.5200-1.5170 (resulting in bullish engulfing daily candlesticks) leading to the recent bullish pullback towards 1.5600 (the backside of the depicted uptrend). It applied significant bearish pressure to the GBP/USD pair.
Price actions should be watched around the price zone of 1.5150-1.5200 as it corresponds to previous prominent weekly bottoms.
Note that daily fixation below 1.5150 indicates a quick bearish movement towards the price level of 1.4970 (weekly demand level).
Trading Recommendation:
A valid sell entry was suggested around the zone of 1.5550-1.5580 (recent resistance zone). It is already running in profits. S/L should be lowered to 1.5250 to secure our profits.
On the other hand, a low-risk buy entry can be offered around the weekly demand level (1.4970) if the current bearish momentum persists towards it. S/L should be placed below 1.4930.
The material has been provided by InstaForex Company - www.instaforex.com