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 is located around 1.5820.
On Wednesday, the GBP/USD pair was rejected obviously at 1.5870. Significant bullish was manifested in the daily candlestick. Yet, the bears managed to hit new lows around 1.5800.
Note that the current prices corresponds to the lower limit of the 4H movement channel. The GBP/USD looks quite oversold on the 4H chart. Bullish correction should be anticipated despite the bearish outlook on the daily chart.
Price action should be watched around the current prices (1.5800-1.5820). A valid BUY entry may be offered today if sufficient bullish rejection is expressed. Stop Loss should be set as daily closure below 1.5770.
Bullish fixation above the price level of 1.5890 ( significant Key-level ) and 1.6025 ( previous weekly high ) confirms this bullish position. The target level would be located around 1.6150 initially.
The material has been provided by InstaForex Company – www.instaforex.com