On December 12, the previously-dominating bearish momentum came to an end when the GBP/USD pair visited the price levels of 1.2500 where the backside of the broken daily uptrend was located.
Since then, the current bullish swing has been taking place until January 17 when a bearish Engulfing candlestick was demonstrated around 1.2999 (around the depicted downtrend line in RED).
This paused the bullish scenario for a while, allowing sometime for bearish correction towards 1.2830 where another bullish swing was initiated.
On Friday, the GBP/USD pair was almost approaching the supply level of 1.3240 when the current bearish pullback was initiated around 1.3215.
A bearish engulfing daily candlestick was demonstrated by the end of Tuesday's consolidations. Thus, the GBP/USD pair lost its bullish breakout above 1.3155. Thus, an intraday supply level is currently located around 1.3155.
The current decline below 1.3150 will probably bring the GBP/USD pair into a deeper bearish correction that extends down to 1.3000 where bullish recovery should be anticipated.
On the other hand, for the bullish scenario to regain its validity, bullish persistence above the price level of 1.3150 (Recent Supply Level) should be re-established on a daily basis. This would enhance another bullish visit towards 1.3240.
Trade Recommendations:
Conservative traders should wait for a bearish pullback towards 1.3000 (backside of the broken downtrend in RED) for a valid BUY entry.
T/P levels to be located around 1.3055, 1.3155 and 1.3200. Any bearish H4 closure below 1.2950 invalidates this scenario.
The material has been provided by InstaForex Company -
www.instaforex.com