On February 5, temporary bullish breakout above 1.5220 (previous consolidation range) took place. Shortly after, an ascending channel was established at the level of 1.5170-1.5200. This indicates bullish sentiment on the market.
A projected target for this bullish breakout has already been reached around 1.5550 where the previous daily bottoms were located (solid resistance).
Two weeks ago, the bearish breakdown of lower limit of the depicted channel occurred enhancing the bearish side of the market and confirming the Flag pattern as bearish.
Significant bearish pressure was applied at the price of 1.5200 (R2), then 1.4950 (R1 = broken weekly bottom).
Bearish persistence below 1.4950-1.5000 indicated a further bearish decline. Initial projection target for this bearish breakout was located at 1.4700.
Recently, GBP/USD bulls managed to defend the recent bottom at 1.4700. Evident bullish rejection was expressed around 1.4630 resulting in the formation of a bullish head and shoulders reversal pattern.
Fixation above 1.4980-1.5000 (neck-line) is likely to extend the pattern’s projection target towards 1.5200.
Otherwise, the GBP/USD pair remains in the long-term downtrend as depicted on both the daily and weekly charts. If so, bearish breakdown of 1.4700 is needed to resume this bearish scenario.
Conservative traders can wait for the H4 closure above 1.5000 for a short-term buy entry.
TP levels should be set at 1.5080, 1.5120, and finally at 1.5200.
SL should be set as daily closure below 1.4900.
The material has been provided by InstaForex Company – www.instaforex.com