Since January 2016, bullish persistence above 1.4500 was mandatory to maintain enough bullish strength in the market.
However, the previous weekly candlesticks maintained their bearish persistence below the depicted weekly supply zone (below 1.4470) which allowed further bearish decline to occur.
The prominent 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 (prominent weekly demand level) where a significant bullish swing was initiated on March 1.
On the other hand, the price zone of 1.4475-1.4670 has been standing as a significant supply zone during the past few weeks.
On June 7, the depicted long-term downtrend line came to meet the GBP/USD pair around the price zone (1.4475-1.4670).
Hence, significant bearish rejection and a strong bearish weekly candlestick were executed around the upper limit of it (1.4670 level).
As long as the GBP/USD pair keeps trading below the levels of 1.4670 and 1.4480, next bearish destinations will be located at 1.4100, 1.4050, and probably 1.3900.
The price zone of 1.4678-1.4670 (61.8% Fibonacci level and the depicted downtrend line) stood as a significant supply zone which offered many valid SELL opportunities over the past few weeks.
As anticipated, daily persistence below the level of 1.4470 enhanced further bearish decline towards 1.4350, 1.4220, and 1.4040.
For traders who missed the initial SELL entry around 1.4670, the price zone of 1.4380-1.4400 (recent supply zone) should be watched for another valid entry if any bullish pullback occurs soon.
On the other hand, the nearest demand level comes to meet the GBP/USD pair around 1.4040 where price action should be watched for a possible short-term buy entry.
On the other hand, bearish persistence below 1.4040 allows a quick bearish decline towards 1.3845 (Prominent Demand Level that goes back to February 2016) where a better BUY entry with a lower risk/reward ratio can be offered.
The material has been provided by InstaForex Company - www.instaforex.com