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 bottoms established around 1.5580-1.5540 terminates the current ranging movement, rendering the current consolidation range as a bearish flag pattern with projected target at 1.5310.

On the other hand, obvious bullish fixation above the price level of 1.5760 exposes the price level of 1.5880 for retesting. Note the current bearish rejection expressed today when the pair reached 1.5760 ( the upper limit of the current consolidation zone ).

Trade Recommendation:

Wait for bullish fixation above 1.5760 for a LONG entry with SL as daily closure below entry levels. TP should be located at 1.5800 and 1.5880.