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.
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.
Yesterday as well as Wednesday’s daily candlesticks represent 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 could have taken a BUY position around 1.5600-1.5650 as anticipated in previous articles.
Stop loss to be set at 1.5620 ( few pips above entry levels ) to offside the risk of a counter-trend position.
The material has been provided by InstaForex Company – www.instaforex.com