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On October 21, the GBP/USD pair was demonstrating an ascending wedge reversal pattern while approaching the depicted SUPPLY-zone (1.2980-1.3000).
For the following few days, the GBP/USD pair has failed to achieve a persistent bullish breakout above the depicted SUPPLY-zone (1.2980-1.3000) which corresponds to a previous Prominent-TOP that goes back to May 2019.
Thus, a high probability of bearish reversal existed around the mentioned price zone. Hence, a quick bearish movement was initiated towards 1.2780 (Key-Level) where bullish recovery was demonstrated on two consecutive visits.
That's why, the GBP/USD pair has been trapped between the mentioned price levels (1.2780-1.3000) until Wednesday when bullish breakout above 1.3000 was achieved.
Short-term technical outlook remains bullish as long as consolidations are maintained above 1.3000 on the H4 chart.
On the other hand, the pair was recently testing the upper limit of the newly-established depicted short-term bullish channel around 1.3165.
Moreover, a triple-top pattern was being established around the same price level with neckline around 1.3100. However, this was followed by an exhaustion bullish spike towards 1.3225 which returned back towards 1.3144 quickly.
That's why, high probability of bearish reversal exists around the current price levels. Bearish closure below 1.3100 (neckline) is needed to enhance further bearish decline towards 1.2980 where bullish recovery may be anticipated.
Trade Recommendations:
Risky traders can have a valid SELL entry either upon a bullish pullback towards 1.3185 or a bearish closure below 1.3100. T/P level to be located around 1.2980.
On the other hand, conservative traders should wait for a bearish pullback towards 1.2980-1.3000 for a valid BUY signal with bullish target around 1.3120 and 1.3150.
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