Evident bullish recovery emerged from the area around 1.4550, where a significant bullish engulfing weekly candlestick was expressed.
Shortly after, persistence above the levels of 1.5000-1.5080 exposed the weekly supply zone of 1.5500-1.5550 (roughly corresponding to weekly 50% Fibonacci level) where a significant bearish pressure was previously applied on February 22.
The market has been already pushed above the weekly supply at 1.5530 (50% Fibo level) and slightly above 1.5720 (FE 100%), until the evident bearish pressure was applied around 1.5800 resulting in two recent bearish engulfing weekly candlesticks.
Note that persistence below the weekly supply at 1.5530 (corresponding to 50% Fibo level) hindered the ongoing bullish swing. It's a prominent key-zone for GBP/USD bears.
It should act as an Intraday Supply zone to allow a bearish pullback towards 1.5100 where solid long-term buy positions can be taken.
Sideways movement with a slight bearish tendency had been expressed on the daily chart until a bullish breakout took place above 1.4970-1.5000 (through a long-term bullish reversal pattern).
The zone between 1.5000 and 1.5100 failed to keep prices below. Moreover, the GBP/USD pair formed a prominent demand zone while trending within the depicted bullish channel.
A daily closure above the weekly supply zone of 1.5500-1.5530 exposed the next supply level located at 1.5720 (100% Fibonacci Expansion of the recent bullish swing) where evident bearish pressure was applied.
A bearish breakout off the depicted bullish channel took place as a result of the bearish pressure which originated around 1.5660 (a bearish engulfing candlestick and a lower high).
After a breakuot of 1.5500-1.5550 (lower limit of the broken channel), the market failed to gather enough bearish momentum towards the intraday demand level at 1.5100.
A bullish pullback towards 1.5550 (Intraday SUPPLY) is currently taking place. It is likely to offer a valid sell entry for those who missed the initial breakout.
S/L should be set as daily closure above 1.5560.
The material has been provided by InstaForex Company – www.instaforex.com