Few months ago, the market was pushed above the weekly key zone around 1.5550 in an attempt to reach the area of 1.5900, which has been providing the GBP/USD pair with significant resistance.
A previous weekly candlestick closure above 1.5350 hindered a 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 candlesticks came as bearish engulfing candles, closing below the level of 1.5450 (the neckline of the Head and Shoulders pattern).
It supported the bearish side of the market in the long term. An approximate projection target should be located at the level of 1.5050 for this reversal pattern.
The demand level at 1.5170 ( the origin of a previous bullish engulfing weekly candlestick) was broken-down earlier Today after it has provided the GBP/USD pair with significant bullish rejection three weeks ago.
The next demand level to meet the GBP/USD pair is located at 1.4950 (weekly demand level) where price action should be watched for a valid BUY entry.
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 reaction was expressed around 1.5200-1.5170 (resulting in bullish engulfing daily candlesticks)
This led to the recent bullish pullback towards 1.5600 (the backside of the depicted uptrend). It applied significant bearish pressure to the GBP/USD pair.
Recently, daily candlestick closure above the price level of 1.5380 (occurred on last Friday) enhanced the bullish side of the market exposing price levels around 1.5500 where bearish rejection was anticipated, similar to what happened back on October 22.
That is why, the price zone of 1.5500-1.5550 offered a valid sell entry as expected on Monday. S/L should be lowered to 1.5510.
Demand levels at 1.5350 and 1.5170 were broken-down earlier this week. Now, these levels constitute prominent supply levels to be watched for new sell entries.
They should be defended by the GBP/USD bears in order to allow further bearish decline towards 1.4950.
Note that bearish persistence below 1.5170 exposes next demand levels at 1.5090, 1.5025 and 1.4950.
A low-risk buy entry will probably be offered around the weekly demand level at 1.5000-1.4950.
S/L should be placed below 1.4920.
The material has been provided by InstaForex Company – www.instaforex.com