Overview:

The GBP/USD pair has been moving downwards respecting the depicted bearish channel since mid-September 2014 when the ongoing channel was initiated.

On December 17, the market failed to express a bullish breakout above the upper limit of the daily bearish channel. Shortly after, an extensive bearish pressure was applied against the price levels of 1.5540-1.5560 on December 23.

Daily closure below the recent bottoms established around 1.5540-1.5560 rendered the previous consolidation range as a bearish flag pattern with projection target at 1.5300.

The market has already pushed further below this level reaching down to 1.5030 where the lower limit of the channel provided significant support for the pair.

Bullish recovery was manifested by the ascending bottoms being established on the H4 chart. Since the pair hit the recent high around 1.5260, successive bearish pressure has been applied resulting in the flag pattern on the H4 chart.

The key-support level for today's movement is located at 1.5100 (the lower limit of the depicted flag pattern). Fixation above it enhances the bullish side of the market towards 1.5260 and 1.5380.

However, within such a strong bearish trend you should not exclude the other scenario that the market fails to fixate above 1.5200 (the upper limit of the flag pattern) followed by H4 breakdown below 1.5150 and 1.5100. If so, further bearish tendency on the market should not be excluded, probably, new lows below 1.5030 would be visited then.

Trading recommendations:

Price zone of 1.5350-1.5380 (50% - 61.8% Fibonacci Levels and the upper limit of the daily channel) should be watched for new SELL entries with SL as daily closure above 1.5400.