Few months ago, the market was pushed above the weekly key zone around 1.5550 in an attempt to reach the area of 1.5900, which has been providing the GBP/USD pair with significant resistance.
Recent weekly candlesticks came as bearish engulfing candles, closing below the level of 1.5170 (the neckline of the Head and Shoulders pattern).
This supports the bearish side of the market in the long term. An approximate projection target should be located at the level of 1.4800 for this reversal pattern.
The previous demand level at 1.5170 (the origin of a previous bullish engulfing weekly candlestick) was broken down last week after it has provided the GBP/USD pair with significant bullish rejection a month ago.
Now it constitutes an important supply level to be watched for bearish positions that can be offered today.
The next demand level to meet the GBP/USD pair is located at 1.4950 (weekly demand level) where a possible BUY entry can be offered.
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 reaction was expressed around 1.5200-1.5170 (resulting in bullish engulfing daily candlesticks)
This led to the recent bullish pullback towards 1.5600 (the backside of the depicted uptrend). It applied significant bearish pressure to the GBP/USD pair.
Recently, daily candlestick closure above the level of 1.5380 (occurred two weeks ago) enhancing the bullish side of the market exposing levels around 1.5500 where bearish rejection was anticipated, similar to what happened back on October 22.
Demand levels at 1.5350 and 1.5170 were broken down last week. These levels currently constitute prominent supply levels to be watched for new sell entries. This level is being visited today.
Note that bearish persistence below 1.5170 is mandatory to allow further bearish decline towards next demand levels at 1.5090, 1.5025, and 1.4950.
Trading Recommendation:
A low-risk buy entry will probably be offered around the weekly demand levels at 1.5000-1.4950.
S/L should be placed below 1.4920. Initial T/P levels should be located at 1.5170 and 1.5300.
Risky traders can SELL the GBP/USD pair around 1.5170 which is being visited today. S/L should be located above 1.5230.
The material has been provided by InstaForex Company - www.instaforex.com