A few months ago, the market was pushed above the weekly key zone around 1.5550 in an attempt to reach the area of 1.5900, which has been providing the GBP/USD pair with significant resistance.
Recent weekly candlesticks came as bearish engulfing candles, closing below the level of 1.5220 (the neckline of the Head and Shoulders pattern).
It supported the bearish side of the market in the long term.
A long-term bearish target is projected towards the level of 1.4800 for this reversal pattern.
The previous demand level at 1.5200 (the origin of a previous bullish engulfing weekly candlestick) was broken down one month ago This bearish tendency was confirmed by the Shooting Star and the bearish engulfing weekly candlesticks of the previous weeks.
Hence, a quick bearish decline towards the weekly demand level at 1.4950 was expected as a result of the bearish breakdown below 1.5200.
Note that another weekly closure below 1.4950 is needed to clear the way towards 1.4800 (long-term bearish target).
Prominent demand levels at 1.5350 and 1.5200 were broken down a few weeks ago. These levels currently constitute prominent supply levels to be watched for new sell entries.
Recently, the key level of 1.5200 was temporarily breached to the upside before a daily bearish engulfing candlestick was expressed around 1.5330 on November 20.
Bearish persistence below 1.5200 and then 1.5050 (previous weekly bottom) enhanced further bearish decline towards the weekly demand level at 1.4950 (also corresponding to the lower limit of the depicted channel).
A bullish engulfing daily candlestick was expressed around 1.4950 on Thursday.
That is why, a bullish pullback towards 1.5200-1.5230 should be expected as long as the EUR/USD bulls keeps moving above 1.4950.
For conservative traders, a valid buy entry was offered around the weekly demand zone of 1.4950-1.4930.
S/L should be placed below 1.4900. Initial T/P levels should be located at 1.5000, 1.5170 and 1.5300.
On the other hand, risky traders can sell the GBP/USD pair if a bearish closure below 1.4950 occurs today. S/L should be placed above 1.5010.