The GBP/USD pair has been moving downwards respecting the depicted downtrend line since July 15 when the ongoing downtrend was initiated. Many bearish impulses were previously initiated around 1.7180, 1.6630, and 1.6400 where the downtrend line came to meet the pair then.
The price zone of 1.6060 – 1.6090 constituted a transient daily support that paused the bearish movement for a few days since September 9. However, bears quickly managed to push below reaching down to 1.5890 (depicted on the chart). Price level of 1.5890 provided a solid daily support level that provided evident bullish recovery. Thus, bulls have pushed above the downtrend line.
Bullish fixation above 1.6060 was essential to maintain the bullish scenario. However, bears have failed to do so. Instead, the market moved towards the backside of the broken trend line once again.
The 4H chart shows a wide bearish channel that was initiated in October. There lower limit of which was located around 1.5800-1.5790 at the last time of retesting that took place on Friday.
The GBP/USD pair looks quite oversold on the 4H chart. Bullish correction should be anticipated despite the bearish outlook on the daily chart. Bullish fixation above price zone of 1.5890-1.5900 is mandatory to confirm the depicted bullish reversal pattern.
Price action should be watched around (1.5800-1.5820). A valid BUY entry may be offered. Stop Loss should be set as daily closure below 1.5760.
Bullish fixation above the price level of 1.5890 ( significant Key-level ) and 1.6025 ( previous weekly high ) indicates a bullish corrective movement.
If so, bullish target level would be initially located around 1.6150.
The material has been provided by InstaForex Company – www.instaforex.com