Significant supply levels located around 1.5300 (weekly 38.2% Fibonacci level) and 1.5500 (weekly 50% Fibonacci level) have been providing a significant supply over the GBP/USD pair for few months.
Evident bullish recovery emerged from the area around 1.4550 where a significant bullish engulfing weekly candlestick was expressed.
As mentioned before, 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 significant bearish pressure was previously applied on February 22.
This week, the market has already pushed above the weekly supply (1.5530) and 1.5720 (FE 100%). That is why the current weekly candle closure should be monitored to determine the next destination of the pair.
Note that persistence above the weekly supply at 1.5530 hinders the long-term bearish trend for some time.
Sideways movement with slight bearish tendency had been expressed on the daily chart until the bullish breakout took place above 1.4970-1.5000 (via a long-term bullish reversal pattern).
The price zone between 1.5000 and 1.5050 (daily 38.2% and 50% Fibonacci levels) failed to hold. Moreover, it constitutes a prominent demand level for the GBP/USD pair.
It offered a valid buy entry for retesting that took place last week. S/L can advance to 1.5500 to secure some profits now.
As already mentioned, daily closure above the weekly supply zone 1.5500-1.5530 exposed the next supply level located at 1.5720 (100% Fibonacci Expansion of the recent bullish swing).
The price zone of 1.5450-1.5500 constitutes a prominent demand zone to be watched for valid intraday buy entries if a bearish pullback occurs soon.
On the other hand, the next supply level to meet the pair is located near the level of 1.5990 (141.4% Fibonacci Expansion of the recent bullish swing) where a short-term price action should be assessed.
Risky traders can wait for a valid sell entry near 1.5990 if signs of bearish reversal are expressed on the H4 chart.
The material has been provided by InstaForex Company – www.instaforex.com