Few months ago, the market was pushed above the weekly key zone around 1.5550 in an attempt to reach the area around 1.5900, which has been providing evident supply for the GBP/USD pair.
Last week, strong bearish pressure was applied at the level of 1.5550 again. It was broken down temporarily until the last week when the weekly bullish engulfing candlestick was expressed.
For several weeks, consecutive weekly candlesticks has been generating contradictory signals.
However, a recent weekly candlestick closure above 1.5500 hindered a further bearish decline for some time and enhanced the bullish side of the market initially towards 1.5670 (previous weekly high) and 1.5780 (61.8% Fibonacci level).
The previous weekly candlestick closure persisted below the price level of 1.5450 (key level). This enhances the bearish side of the market in the long term.
The nearest demand level around 1.5200 is exposed as long as GBP/USD bears manage to keep moving below the level of 1.5450.
Previously, the zone of 1.5800-1.5880 acted as significant supply. It offered a valid sell entry few weeks ago. All T/P levels were successfully reached.
On the other hand, the level of 1.5550, which corresponds to the 50% Fibonacci level and the previous prominent top, was temporarily broken allowing further bearish decline towards 1.5350 where an ascending bottom was recently established.
The level of 1.5500 constituted a significant key level to watch for. It corresponded to the uptrend line depicted on the chart.
Prominent supply/resistance levels were located around the level of 1.5770 (prominent 61.8% Fibonacci level) where the right shoulder of the depicted bearish reversal pattern was originated.
That is why, a valid sell entry was suggested for retesting 1.5770 on Monday. The position is already running in profits now.
Moreover, the bearish movement towards 1.5330 and 1.5200 should be expected as long as the market keeps trading below the zone of 1.5480-1.5500.
On the other hand, bearish rejection should be expected at retesting of the depicted 50% Fibonacci level (around 1.5540) with the same T/P levels projected towards 1.5200.
The material has been provided by InstaForex Company – www.instaforex.com