The GBP/USD pair has been moving downwards below 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, the 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. A bullish engulfing daily candlestick is manifest on the chart.
Recently, the bulls has pushed above the downtrend line. Bullish breakout off the downtrend line as well as an inverted bullish Head and Shoulders are already manifest on the chart. Bullish fixation above 1.6060 was anticipated to maintain the bullish scenario.
As suggested, this opens the way for the bulls to push towards 1.6250 initially ( significant bottom established in February 2014 and 23.6% Fibonacci level ).
A valid BUY entry was suggested after fixation above 1.6090 (the broken trend line). This position is running in profits now. Target levels are located at 1.6250 and 1.6310. Stop Loss should be advanced to be just below 1.6050.
Stepping above 1.6180 ( last week’s high ) probably confirms a longer-term bullish position (inverted head and shoulders pattern ) towards 1.6380-1.6400 where 38.2% Fibonacci level is located.
The material has been provided by InstaForex Company – www.instaforex.com