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 was established.
Evident bullish recovery emerged at 1.4560 pushing the GBP/USD pair above the level of 1.4700, and then higher highs were hit.
As anticipated, the daily closure above 1.5060 exposed the next resistance levels at 1.5400 and 1.5450 where extensive bearish pressure was previously applied.
This expanded the bearish side of the market towards the levels of 1.5300, 1.5250, and 1.5100 where the most recent bullish swing was initiated on May 5.
On the other hand, the price zone of 1.5750-1.5800 (critical resistance zone) offered a valid sell entry almost three weeks ago. The final bearish target at 1.5450 was already reached.
Moreover, a lower high at 1.5660 applied significant bearish pressure. That is why the support zone between 1.5500 and 1.5450 failed to stop this bearish momentum led to a breakout.
The recent daily candlesticks came as bullish engulfing ones. This hindered a further bearish decline and allowed the occurrence of the current bullish pullback towards 1.5500.
Conservative traders can wait for a valid sell entry around 1.5550 (the key level depicted on the chart). S/L is likely to set above 1.5650.
On the other hand, the daily candlestick closure above 1.5550 threatens the previous bearish scenario.
The material has been provided by InstaForex Company – www.instaforex.com