Few months ago, the market was pushed above the weekly key zone around 1.5550 in an attempt to reach the area of 1.5900, which provided significant bearish resistance.

Recent weekly candlesticks came as bearish engulfing candles closing below the level of 1.5220 (the neckline of the Head and Shoulders pattern). This supported the bearish side of the market in the long term.

A quick bearish decline towards the previous weekly level of 1.4950 was expected as a result of a bearish breakout below 1.5200.

Extensive bearish pressure has been applied to demand levels of 1.4620 and 1.4360. Both of them were broken to the downside.

Shortly after the GBP/USD moved below 1.4220, strong signs of bullish recovery have been expressed around 1.4075 resulting in the weekly candlestick, which closed above 1.4220 again (a bullish hammer weekly candlestick).

The price zone of 1.4360-1.4220 remains a significant demand zone for the GBP/USD pair.

That is why, bullish persistence above 1.4220 and 1.4360 is mandatory to maintain bullish strength in the market. The first bullish target is seen at 1.4615.

During 2015, the significant bearish rejection has been expressed around 1.5770 and 1.5230 where a bearish Head and Shoulders reversal pattern was formed. Since then, the market has been trending downwards within the depicted bearish channel.

The level of 1.4950 was broken to the downside few weeks ago, constituting a significant supply level. As anticipated, it offered a valid sell entry on December 24.

Daily persistence below 1.4800 (the lower limit of the current bearish channel) favored a bearish decline towards 1.4680 and 1.4610 where previous prominent bottoms are located on the GBP/USD daily chart.

Currently, the GBP/USD pair looks oversold as it is being pushed further below the prominent demand levels of 1.4620 and 1.4360.

That is why, any signs of bullish rejection around the demand level of 1.4220 should be considered a valid buy signal.

Bullish persistence above 1.4360 should keep moving the pair towards higher bullish targets. The first bullish target is seen at 1.4615.

Trading Recommendation:

As anticipated, traders could take a valid buy entry when the GBP/USD pair achieved a daily closure above the level of 1.4220 on Friday.

Initial T/P levels should be located at 1.4360, 1.4440, and 1.4500, while S/L should be located below 1.4200.

On the other hand, risky traders can have a valid buy entry when the GBP/USD pair achieves another bullish closure above 1.4360. T/P levels would be located at 1.4440, 1.4500, and 1.4600.