In June 2015, the pair pushed above the depicted level of 1.5550 trying to reach the zone of 1.5900 where the depicted Head and Shoulders pattern was formed.
In November 2015, a bearish engulfing weekly candlestick closed below the level of 1.5200 (the neckline of the Head and Shoulders pattern). This enhanced the bearish side of the market in the long term.
Extensive bearish pressure has been applied against the demand levels of 1.4620 and 1.4360. Both of them were broken to the downside.
Shortly after the GBP/USD pair moved below 1.4220, evident signs of bullish recovery were expressed around 1.4075. Hence, the previous few weekly candlesticks closed again above 1.4220 and 1.4360 indicating strong bullish demand.
Bullish persistence above 1.4360 was mandatory to maintain enough bullish strength in the market. The first bullish target was seen at 1.4615.
Any signs of a bearish rejection around 1.4615 should be taken into consideration as it corresponds to a broken weekly demand level, which is now acting as a strong supply level.
During 2015, a significant bearish rejection was expressed around 1.5770 and 1.5230 where a bearish Head and Shoulders reversal pattern was formed. Since then, the market has been trending downwards within the depicted bearish channel.
Few weeks ago, the level of 1.4950 was broken to the downside, constituting a significant supply level.
Daily persistence below 1.4800 (the lower limit of the depicted bearish channel) favored a bearish decline towards 1.4680 and 1.4610 where previous prominent bottoms were located in the GBP/USD daily chart.
Recently, the GBP/USD pair looked oversold as it moved further below the prominent demand levels of 1.4620 and 1.4360.
That is why the depicted signs of a bullish rejection around the demand level of 1.4220 were considered to be a valid buy signal.
Bullish persistence above 1.4360 was mandatory to maintain enough bullish strength in the market. The first bullish target around 1.4615 is already reached.
On February 4, the market failed to close above 1.4615. Instead of it, an inverted hammer daily candlestick was expressed. Hence, a bearish pullback took place towards 1.4360 where another valid buy entry was offered yesterday.
Later on February 8, the market expressed considerable bullish rejection around 1.4360. This led to the current bullish pullback towards 1.4600 again.
As expected in yesterday's article, conservative traders could take a valid buy entry around 1.4360. T/P levels remains located at 1.4500 and 1.4600, while S/L should be advanced to 1.4440 to secure some profits.
On the other hand, watch for possible bearish rejection around the level of 1.4600. This price level corresponds to a broken weekly demand level, which is now acting as a strong supply level.