Previously around 61.8% – 50% Fibonacci levels ( Price zone between 1.6240 and 1.6350 ), a short position was suggested then and it got triggered few days later. The market successfully pushed below 1.6100 shortly after.
Prominent bullish DEMAND existed around price zone of 1.5940 – 1.5880. Bullish engulfing daily candlesticks emerging off these levels are depicted on the chart.
On the other hand, the price zone of 1.6100-1.6140 constituted a prominent SUPPLY zone. The pair has moved sideways. Recent bearish breakout took place last week.
Despite the bullish breakout off the depicted bearish channel on the daily chart, bulls have failed to fixate above price levels of 1.5870 and 1.5945.
Instead, daily fixation below 1.5870 has put further bearish pressure on the pair to reach 1.5780, 1.5700 and 1.5650 where the back side of the mentioned bearish channel is located.
Generally, bullish recovery should be anticipated especially after the daily hammer candlestick expressed on Friday.
Friday’s daily candlestick represents intraday DEMAND being offered around 1.5650 after such a strong bearish momentum.
4H chart reveals long period of downside movement roughly maintained within the limits of the depicted channel.
Three weeks ago, bulls managed to push beyond the upper limit of the channel. However, the GBP/USD pair was trapped between the backside of the channel (1.5860) and price level of 1.6140.
This week, the bears managed to break below the recent low around 1.5790. This exposed the potential target at 1.5700 and 1.5650 where the backside of the broken channel is roughly located.
Conservative traders should wait for a bullish pull-back towards 1.5820-1.5860 for a valid SELL entry.
On the other hand, risky traders can benefit of the current low prices and take a BUY position around the current prices with tight stop loss ( DAILY closure below the entry levels ).
The material has been provided by InstaForex Company – www.instaforex.com