Overview:
The GBP/USD pair has been moving downward respecting the depicted bearish channel since mid-September when the ongoing channel was initiated. Many bearish impulses were previously initiated around 1.6450, 1.6170, and 1.5940 where the upper limit of the channel came to meet the pair.
The price zone of 1.5890-1.5870 constituted a transient daily support that paused the bearish movement for a few days. However, bears quickly managed to push lower.
Bullish fixation above 1.5890-1.5900 was essential to maintain the bullish scenario, however, bears have failed to do so. Instead, the market pushed towards the support level located around 1.5600 where the lower limit of the ongoing channel was previously located.
The GBP/USD pair looked quite oversold. Bullish correction was anticipated as the pair has tested a prominent WEEKLY support (price level of 1.5600) corresponding to multiple previous tops established back in May and June 2013. That is why the sideway movement is still taking place roughly between 1.5600 and 1.5780.
However, a break below the recent bottom around 1.5580 terminates the current ranging movement, rendering the current consolidation range as a bearish flag pattern with projected target at 1.5410.
Trading recommendations:
As anticipated, a previous valid BUY opportunity was suggested at retesting of the same price level of 1.5600. TP levels should be set at 1.5760, 1.5820 and 1.5880. SL remains as a daily closure below 1.5580
On the other hand, a low risk SELL entry will probably be offered around 1.5880-1.5940 (Important Fibonacci Levels slightly above the upper limit of the depicted bearish channel ).
Stop Loss should be located above 1.5950.
