Two weeks ago, the GBP/USD pair found intraday DEMAND around 1.5550 where many lows were previously established back in November.
The DAILY outlook looked quite bullish while bulls were defending the lower limit of the consolidation range around 1.5550 for many successive weeks. However, a bearish breakout was expressed on Tuesday.
The bears have already reached down to 1.5485. Daily closure confirmed the bearish breakout.
Now we are seeing a bearish flag pattern similar to what happened back in October provided that the market does not reach above 1.5550-1.5570 (recent SUPPLY zone).
Projection target would be located around the price level of 1.5350.
A consolidation movement ranging between the price levels of 1.5770 and 1.5550 represented the state of indecision on the market after such a long bearish rally that started off 1.7100 and 1.6500.
As anticipated, the bearish breakout below 1.5550 directly exposed lower targets. Potential projection target for this range breakout pattern should be located around 1.5330-1.5350.
However, activity in the market remains limited as holiday pushes into a tight trading range, no real directional movement should be expected.
Note that H4 fixation above 1.5570 temporarily pauses the current bearish trend exposing higher SUPPLY levels (initially 1.5650) to be retested first.
Conservative traders should wait for a bullish pullback towards higher SUPPLY levels for lower-risk SHORT entries.
The material has been provided by InstaForex Company – www.instaforex.com