Recently, Bullish persistence above 1.2265 has enhanced another bullish movement up to the price levels of 1.2520-1.2590 where significant bearish rejection as well as a quick bearish decline were previously demonstrated (In the period between 14th – 21 April).
Moreover, Atypical Bearish Head & Shoulders reversal pattern was in progress. The GBP/USD pair was demonstrating the Right Shoulder of the pattern.
Hence, Bearish persistence below 1.2265 (Reversal Pattern Neckline) was needed to confirm the pattern. Thus, enhance another bearish movement towards 1.2100, 1.2000 then 1.1920.
Moreover, the price zone of 1.2300-1.2280 corresponding to a short-term uptrend was breached to the downside failing to provide enough bullish support for the pair. Thus, enhancing the bearish side of the market.
Temporary bearish breakout below 1.2265 was demonstrated in the period between May 13 – May 26.
However, immediate bullish rebound has been expressed on May 18.
On the other hand, the price zone of 1.2520-1.2600 (Backside of the broken Uptrend) stands as a recently-established SUPPLY-Zone to offer bearish rejection and a valid SELL Entry for the pair in the short-term.
Hence, bearish decline would be expected to be enabled towards 1.2020 as a projection target for the reversal pattern provided that no bullish breakout above 1.2600 is expressed.
Trade recommendations :
Intraday traders can still consider the current bullish pullback towards the price zone of 1.2520-1.2600 as a valid SELL Entry.
T/P level to be located around 1.2345, 1.2265 and 1.2150 while S/L should be placed above 1.2650.