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.
Last week, the market has already pushed above the weekly supply at 1.5530 (50% Fibo level) and slightly above 1.5720 (FE 100%).
However, evident bearish pressure was applied around 1.5800, resulting in the depicted bearish engulfing weekly candlestick.
Note that persistence below the weekly supply at 1.5530 (corresponding to 50% Fibo level) hinders the ongoing bullish trend. It gives more time for sideway movement with bearish tendency.
Sideways movement with a 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 failed to keep prices below. Moreover, it now constitutes a prominent demand zone for the GBP/USD pair.
It offered a valid buy entry for retesting that took place last week.
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. So, a bearish pullback took place towards 1.5500 on Tuesday.
Bearish breakout off the depicted bullish channel took place on Friday as a result of the evident bearish pressure that emerged at the level of 1.5660.
Persistence below 1.5470 is needed to maintain the current bearish momentum.
Initial bearish targets would be located at 1.5250 and probably 1.5100. On the other hand, consolidation above 1.5550 invalidates the current bearish scenario.
The material has been provided by InstaForex Company – www.instaforex.com