For a long period, the price zone of 1.6780-1.6800 constituted solid resistance that provided enough supply for two months until bullish breakout took place on May 1.
The recent prominent bottoms around 1.6465 and 1.6555 (corresponding to the depicted uptrend line) prevented further bearish decline and provided enough buying pressure to keep pushing higher.
The daily chart shows successive bullish breakouts expressed above 1.6850 (the upper limit of a previous congestion zone), then above 1.6930 (the upper limit of the ongoing bullish wedge). The bullish momentum wasn't strong enough to allow the bullish breakout to pursue towards further targets. Instead, this breakout lost its bullish momentum during previous consolidations.
Price levels around 1.6990 provided evident rejection. This paused the ongoing bullish momentum.
The lower limit of the bullish wedge was broken down on Friday showing a full-body bearish daily candlestick.
The GBP/USD showed bullish recovery after testing of 1.6730 leading to daily closure again above 1.6767 enhancing the bullish momentum of the market. However, bearish engulfing daily candlestick is probably being expressed today after testing of 1.6920.
This may lead to another bearish limb to retest the newly established demand levels around 1.6767 as long as the bears keep defending the recent high around 1.6920.
The reversal wedge pattern applied enough bearish pressure to confirm the ongoing reversal pattern which got confirmed by breakdown of price zone of 1.6830-1.6810.
The bulls managed to record a higher value above the recent one at 1.6900. However, the ongoing market demand has been fulfilled around 1.6920 which led to a price decline again.
Price level 1.6840 is the nearest demand level to meet the pair. Price action should be watched carefully for a possible BUY entry with SL to be located below 1.6800.
The material has been provided by InstaForex Company - www.instaforex.com
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