The price zone between 1.3845 and 1.3550 (historical bottoms in January 2009) was considered a significant demand zone to be watched for bullish recovery.
However, by the end of June, a significant bearish breakdown below 1.3550 was expressed as seen on the depicted charts (fundamental reasons).
Bearish persistence below the demand level at 1.3550 enhanced the bearish scenario towards the current price levels around 1.2700 (nearest bearish projection target).
Note that the GBP/USD pair was trapped inside the depicted consolidation range above 1.2700 until a bearish breakout took place on October 6.
Daily persistence below 1.2700 confirms the bearish Flag pattern. Hence, bearish projection target would be located around 1.2020.
Last week, recent bullish recovery was manifested around 1.2080. That’s why, a bullish pullback may be executed towards 1.2700.
On the other hand, any bullish pullback towards 1.2700 should be considered for a valid SELL entry. S/L should be set as daily closure above 1.2700.
The material has been provided by InstaForex Company – www.instaforex.com