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.
A previous weekly candlestick closure above 1.5350 hindered a further bearish decline and enhanced the bullish side of the market towards 1.5670 (previous weekly high) and 1.5780 (61.8% Fibonacci level).
However, recent weekly candlesticks came as bearish engulfing candles, closing below the level of 1.5450 (the neckline of the Head and Shoulders pattern).
It supported the bearish side of the market in the long term. An approximate projection target should be located at the level of 1.5050 for this reversal pattern.
In the short term, the nearest demand level is seen around 1.5170 (intraday demand level and the origin of a previous bullish engulfing weekly candlestick). It provided the GBP/USD pair with significant bullish rejection three weeks ago.
It is expected to be visited again if a weekly closure below 1.5350 (previous weekly bottom) is achieved by the end of this week.
On the other hand, consolidation above 1.5350 hinders further bearish movement giving time for a bullish correction, which previously extended up to the levels of 1.5500.
The previous bearish movement found its way towards the level of 1.5200 (prominent demand level), which prevented further bearish decline.
Instead of it, the evident bullish reaction was expressed around 1.5200-1.5170 (resulting in bullish engulfing daily candlesticks)
This led to the recent bullish pullback towards 1.5600 (the backside of the depicted uptrend). It applied significant bearish pressure to the GBP/USD pair.
Recently, daily candlestick closure above the price level of 1.5380 (occurred on Friday) enhanced the bullish side of the market exposing price levels around 1.5500 where bearish rejection was anticipated, similar to what happened back on October 22.
That is why, the price zone of 1.5500-1.5550 offered a valid sell entry as expected on Monday. S/L should be lowered to 1.5510.
The price level of 1.5350 was broken down earlier today. Now, it constitutes an intraday supply level to be watched for other sell entries.
It should be defended by the GBP/USD bears in order to allow further bearish decline towards 1.5170.
Note that bearish breakdown of 1.5170 directly exposes next demand levels around 1.5090 and 1.5025.
A low-risk buy entry would be offered around the weekly demand level at 1.5000 if a bearish breakdown of the demand level at 1.5150 takes place soon.
S/L should be placed below 1.4930.