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 the GBP/USD pair with evident resistance.
A previous weekly candlestick closure above 1.5500 hindered further bearish decline and enhanced the bullish side of the market towards 1.5670 (previous weekly high) and 1.5780 (61.8% Fibonacci level).
However, recent weekly candlestick came as a bearish engulfing one, closing below the level of 1.5450 (Head and Shoulders neckline).
It supports the bearish side of the market in the long term. For the reversal pattern, an approximate projection target should be located at the level of 1.5050.
In the short term, the nearest demand level to meet the GBP/USD pair is located around 1.5170 (recent weekly bottom and the origin of a previous bullish engulfing weekly candlestick).
Weekly persistence below the price zone of 1.5170-1.5200 is mandatory to allow further bearish decline to occur. On the other hand, persistence above it hinders the current bearish momentum.
Prominent supply/resistance around the level of 1.5770 (prominent 61.8% Fibonacci level) where the right shoulder of the depicted bearish reversal pattern is observed.
That is why a valid sell entry was suggested for retesting at 1.5770 one month ago. All of its targets were successfully achieved.
Moreover, the previous bearish movement found its way towards the level of 1.5200 (prominent demand level), which prevented further bearish decline.
Instead of it, evident bullish rejection took place (bullish engulfing daily candlesticks) leading to the recent bullish pullback towards 1.5560, which provided the current extensive bearish rejection.
Price actions should be watched around the current levels near 1.5150 as it corresponds to the previous prominent weekly bottom.
A short-term buy entry can be offered if enough bullish rejection is expressed around these levels.
On the other hand, daily fixation below 1.5150 allows a quick bearish movement to occur towards the price level of 1.4970 (Weekly Demand Level).
A valid sell entry was suggested around the zone of 1.5550-1.5580 (recent resistance zone). It is already running in profits.
T/P levels to be projected towards 1.5200 (achieved) and 1.5050 (yet to come), while S/L should be lowered to 1.5250 to secure our profits.
On the other hand, a low-risk buy entry can be offered around the weekly demand level at 1.4970. S/L should be placed below 1.4930.
The material has been provided by InstaForex Company – www.instaforex.com