Few 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 has been providing evident supply for the GBP/USD pair.
Last week, strong bearish pressure was applied at the level of 1.5550 again. It was broken down temporarily two weeks ago, when a weekly bullish engulfing candlestick was expressed.
For several weeks, consecutive weekly candlesticks have been generating contradictory signals.
However, a recent weekly candlestick closure above 1.5500 hindered a further bearish decline for some time and enhanced the bullish side of the market towards 1.5670 (previous weekly high) and 1.5780 (61.8% Fibonacci level).
The most recent WEEKLY candlestick came as bearish engulfing one, closing below the price level of 1.5450 (Head and Shoulders neckline). This enhances the bearish side of the market in the long term. Approximate projection target for the reversal pattern should be located near the price level of 1.5050.
In the short term, the nearest demand level around 1.5200 is vulnerable to retesting as long as the GBP/USD bears manage to keep moving below the level of 1.5450 (neckline).
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 the 50% Fibonacci level and the previous prominent top, was temporarily broken allowing further bearish decline towards 1.5350 where an ascending bottom was recently established.
The level of 1.5500 formed a significant key level to watch for. It corresponded to the uptrend line depicted on the chart.
Prominent supply/resistance levels were located around the level of 1.5770 (prominent 61.8% Fibonacci level) where the right shoulder of the depicted bearish reversal pattern was originated.
That is why, a valid sell entry was suggested for retesting 1.5770 last week on Monday. The position is already running in profits now.
Moreover, the bearish movement towards 1.5200 should be expected as long as the market keeps trading below the zone of 1.5480-1.5500.
On the other hand, bearish rejection should be expected at retesting of the depicted 50% Fibonacci level (price zone around 1.5500-1.5540) with the same T/P levels projected towards 1.5200.