The price zone between 1.3845 and 1.3550 (historical bottoms set in January 2009) was considered a significant demand zone to be watched for bullish recovery.
However, by the end of June a significant bearish break below 1.3550 was expressed as seen on the depicted charts (fundamental reasons).
Bearish persistence below the demand level at 1.3550 enhanced the bearish scenario towards the current price levels around 1.2700 (nearest bearish projection target).
Note that the GBP/USD pair was trapped inside the depicted consolidation range above 1.2700 until a bearish breakout took place on October 6.
Daily persistence below 1.2700 confirmed the bearish Flag pattern. That's why, bearish projection target would be located around 1.2020.
Recently, bullish recovery was manifested around 1.2080. That is why, a bullish pullback was being executed towards 1.2700.
The recent bullish pullback towards 1.2700 was suggested to be watched for a valid SELL entry. The bearish engulfing candlestick of the previous week enhances this scenario.
S/L should be lowered to 1.2600 to offset the associated risk. T/P levels should be located at 1.2300 (reached already) and 1.2100.
The material has been provided by InstaForex Company - www.instaforex.com