Two months ago, the market was pushed above the weekly key zone around 1.5550 in an attempt to reach the area around 1.5900, which provided evident supply for the GBP/USD pair.
As anticipated, a bearish pullback towards the level of 1.5550 took place. A bearish breakout below 1.5500 took place two weeks ago.
Last week, strong bearish pressure was applied to the level of 1.5550 again. It was beeing broken temporarily until the last week when bullish recovery was expressed.
Contradictory signals are coming from consecutive weekly candlesticks. This indicates lacking bullish momentum above 1.5500.
The previous weekly candlestick closure above 1.5500 hindered further bearish decline and enhanced the bullish side of the market towards 1.5680 (previous weekly high).
The current weekly candlestick should be monitored by the end of the week to determine if the weekly closure comes above 1.5500 or below.
The nearest demand level around 1.5200 will become exposed if GBP/USD bears manage to bring trading below the level of 1.5500 again.
Previously, the zone of 1.5800-1.5880 acted as significant supply. It offered a valid sell entry few weeks ago. All T/P levels were successfully reached.
On the other hand, the level of 1.5550, which corresponds to 50% Fibonacci level and a previous prominent top, was temporarily broken allowing further bearish decline towards 1.5350 where an ascending bottom was recently established.
Last week, strong bullish price actions were expressed. A bullish pullback towards 1.5600 took place. The level of 1.5550 was breached during last week's consolidations.
However, Thursday's candlestick came as a bearish engulfing one, which enhanced the bearish side of the market again.
The level of 1.5500 is going to be the significant level to watch for. It corresponds to the short-term uptrend line depicted on the chart. It was temporarily breached on Friday.
However, evident bullish pressure was applied at 1.5450 on Monday. A bullish engulfing daily candlestick was expressed by the end of the day.
The nearest supply levels to meet the GBP/USD pair are located around the price levels of 1.5660 (Multiple Daily Highs) and 1.5770 (prominent Supply level).
On the other hand, the bearish scenario towards 1.5470 and 1.5370 should be considered only if the GBP/USD bears manage to successfully push below 1.5500 again.
The material has been provided by InstaForex Company – www.instaforex.com