This week we mentioned that GBP/USD is bearish for the following reasons:
- The GBP/USD currency pair found resistance around 1.5875 which corresponds to the upper limit of both drawn channels.
- The pair has successfully broken the intermediate line of the bullish channel at 1.5800.
- The pair is probably forming a Head and Shoulders reversal pattern which is marked on the chart.
After successful retesting of the intermediate line of the bullish violet channel at 1.5800, GBP/USD currency pair witnessed strong decline recording a daily low at 1.5644 thus breaking the lower limit of the bullish channel around 1.5720.
Break of this channel opens the way for the pair to visit the lower limit of the bearish channel around 1.5585 later, but as expected reversal took place at the daily support at 1.5650 to retest broken supports during the bearish decline of Wednesday.
The pair is now testing the backside of the broken bullish channel which didn't show strong bearish reaction till now.
The pair is now testing the upper limit of the wide bearish blue channel after stepping outside the bearish yellow channel with no obvious bullish strength there.
The pair has a strong resistance level at 1.5760 which the pair didn't succeed to reach yesterday.
It's expected to break the lower limit of the bullish violet channel opening the way to resume its downside movement towards 1.5650 then 1.5585.
Breaks of price level 1.5815 will invalidate this scenario.
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