A 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 1.5220 (the neckline of the Head and Shoulders pattern).
This supported the bearish side of the market in the long term. An approximate target should be located at the level of 1.4800 for this reversal pattern.
The previous demand level at 1.5200 (the origin of a previous bullish engulfing weekly candlestick) was broken down three weeks ago. This bearish tendency was confirmed by the Shooting Star bearish weekly candlestick of a previous week.
A quick bearish decline towards the weekly demand level at 1.4950 remains expected as long as the bearish breakdown below 1.5200 persists on a weekly basis.
The previous bearish movement found its way towards the level of 1.5200 (prominent demand level), which prevented the further bearish decline.
Instead of it, an evident bullish reaction was performed around 1.5200-1.5170 (resulting in bullish engulfing daily candlesticks).
This led to the previous bullish pullback towards 1.5600 (the backside of the depicted uptrend). It placed the GBP/USD pair under significant bearish pressure.
The demand levels of 1.5350 and 1.5200 were broken down a few weeks ago. Currently, these levels constitute prominent supply to be watched for new sell entries.
The key level of 1.5200 was temporarily breached to the upside before a daily bearish engulfing candlestick was expressed around 1.5330 on November 20.
Bearish persistence below 1.5200 and 1.5050 (previous weekly bottom) enhances further bearish decline towards the weekly demand level at 1.4960.
Trading Recommendation:
For conservative traders, a valid buy entry will probably be offered around the weekly demand levels of 1.4950.
S/L should be placed below 1.4900. Initial T/P levels should be located at 1.5170 and 1.5300.
A new SELL entry can be offered around 1.5200 (depicted supply level) if the current bullish pullback persists above 1.5150.
The material has been provided by InstaForex Company - www.instaforex.com