On January 21, after the GBP/USD pair moved below 1.4340, evident signs of a bullish recovery were expressed around 1.4075. Hence, previous weekly candlesticks closed above 1.4340 again.
Bullish persistence above 1.4488 was mandatory to maintain enough bullish strength in the market. The first bullish target was seen at 1.4615 where the most recent bearish swing was initiated.
As previous weekly candlesticks maintained their bearish persistence below the depicted demand zone (below 1.4340), the next demand level located at 1.3845 (historical bottom that goes back to March 2009) provided significant bullish rejection on February 26.
As expected, an evident bullish recovery and a bullish engulfing weekly candlestick were expressed around 1.3850 (prominent weekly demand level). That is why, a valid buy entry was suggested near the same level.
Recently, the price zone of 1.4340-1.4488 has been a significant supply zone during the past few weeks.
That’s why, a quick bearish movement towards the price levels of 1.4060 and 1.3960 is being expressed as expected in the previous articles.
A recent lower high was achieved around the level of 1.4530. This applied extensive bearish pressure against the price level of 1.4340.
Hence, an extensive bearish breakout below 1.4340 was expressed on the daily chart. The GBP/USD pair looked oversold few weeks ago.
That is why, signs of bullish recovery and a profitable long entry were expected around 1.3850. A recent bullish swing was expressed towards the price levels around 1.4400.
On March 30, evident bearish rejection was expressed around 1.4350 (61.8% Fibonacci level). The nearest bearish target was already reached around 1.4050.
The price zone of 1.4340-1.4490 constituted a significant supply zone where a Head and Shoulders reversal pattern was expressed. Estimated bearish targets are located at 1.4060, 1.3960 and 1.3800.
This week, daily persistence below 1.4050 (the reversal pattern neckline) enhances further bearish decline.
On the other hand, if the market failed to push below the current price level of 1.4050, a bullish movement towards the price level of 1.4200 and probably 1.4300 should be expected.
The material has been provided by InstaForex Company – www.instaforex.com