Since January 2016, bullish persistence above 1.4500 was mandatory to maintain enough bullish strength in the market.
However, as the previous weekly candlesticks maintained their bearish persistence below the depicted weekly supply zone (below 1.4470), the next demand level located at 1.3845 (historical bottom that goes back to March 2009) provided a significant bullish rejection on February 26.
As expected, an evident bullish recovery and a bullish engulfing weekly candlestick were expressed around 1.3845 (a prominent weekly demand level) where a significant bullish swing was initiated on March 1.
Recently, the price zone of 1.4475-1.4670 has been a significant supply zone during the past few weeks.
That is why, a bearish rejection should be expected again around the upper limit of this supply zone (1.4650-1.4670).
The nearest destination for the GBP/USD pair would be located at 1.3845.
A lower high was recently achieved around the level of 1.4530. This applied extensive bearish pressure against the price level of 1.4470.
The GBP/USD pair looked oversold when the previous bearish decline extended below 1.4040 (temporary support).
That is why, signs of a bullish recovery and a profitable long entry were suggested around 1.3845. A recent bullish swing was expressed towards the price levels around 1.4470.
The price zone of 1.4470-1.4670 constituted a significant supply zone where the depicted the Head and Shoulders reversal pattern was expressed.
On April 7, the market failed to push below the price level of 1.4050. Hence a bullish movement was executed again towards the price levels of 1.4470 and recently 1.4670.
This week, daily persistence below 1.4470 will be needed to enhance further bearish decline towards 1.4380 and 1.4170.
Otherwise, the GBP/USD pair will extend up to the price level of 1.4680 (61.8% Fibonacci level) where the depicted downtrend comes to meet the pair as well. This is where significant bearish rejection should be expected.
The material has been provided by InstaForex Company - www.instaforex.com