On March 2, a bearish breakout of the lower limit of the previous daily channel occurred enhancing the bearish side of the market. Persistence below the zone between 1.4950 and 1.5000 indicated a further bearish decline towards 1.4700.
Shortly after, the bearish trend was resumed towards the level of 1.4550 where a lower daily bottom (which initiated the ongoing bullish swing) was reached. A daily closure above 1.5060 exposed the next resistance levels at 1.5400 and 1.5450 where a temporary bearish pullback took place on April 29.
The next bullish swing extended up to the levels of 1.5750-1.5800 which offered a valid sell entry. The final bearish target at 1.5450 was already reached.
Recently, higher highs around the level of 1.5200 were hit. That applied strong bullish pressure over the resistance level around 1.5800 via the ongoing bullish swing.
That is why, the resistance level at 1.5800 was temporarily breached. Hence, GBP/USD bulls pursued towards 100% Fibonacci Expansion located around 1.5900.
Significant bearish rejection was expressed around price zone of 1.5900-1.5930. Since then, a major bearish swing has been taking place.
Recently, level of 1.5555 (prominent demand level/depicted uptrend line) was obviously breached earlier this week due to excessive bearish pressure. This enhances the bearish side of the market.
Conservative traders should wait for a bullish pullback towards 1.5550 for a valid sell entry. S/L should be placed above the level of 1.5620.
On the other hand, the price level of 1.5250 is the nearest support to meet the GBP/USD pair if the current bearish momentum persists. It should be watched for signs of bullish rejection.
The material has been provided by InstaForex Company – www.instaforex.com