On March 29, the price levels of 1.2980 (the lower limit of the newly-established bearish movement channel) demonstrated significant bullish rejection.
This brought the GBPUSD pair again towards the price zone of (1.3160-1.3180) where the upper limit of the depicted bearish channel was located.
Since then, Short-term outlook has turned into bearish with intermediate-term bearish targets projected towards 1.2900 and 1.2850.
On April 26, a bullish pullback was executed towards the price levels around 1.3000 (the bottom of March 29) where temporary bullish breakout was temporarily executed until May 13 when evident bearish rejection was demonstrated.
Hence, a bearish Head and Shoulders pattern was expressed on the H4 chart with neckline located around 1.2980.
That's why, the price zone of 1.3030-1.3060 turned to become a prominent supply-zone where a valid bearish entry was offered two weeks ago.
Bearish persistence below 1.2980 (Neckline of the reversal pattern) enhanced further bearish decline.
Initial bearish Targets were already reached around 1.2900-1.2870 (the backside of the broken channel) which failed to provide any bullish support for the GBPUSD pair.
Currently, The GBPUSD pair looks oversold around the current price levels (1.2730). However, no signs of bullish recovery have been manifested yet.
That's why, bullish breakout above 1.2756 is needed to enhance the bullish side of the market on the short-term.
Trade Recommendations:
For those who had a valid SELL entry around the price levels of (1.3035-1.3070). It's already running in profits. S/L should be lowered to 1.2765 to secure more profits.
Conservative traders should wait for another bullish pullback towards 1.2870-1.2905 (newly-established supply zone) to look for valid sell entries. S/L should be placed above 1.2950.
The material has been provided by InstaForex Company - www.instaforex.com