FX.co ★ Intraday technical levels and trading recommendations on GBP/USD for May 12, 2014

Previously, around the price zone of 1.6780-1.6800, the GBP/USD pair found solid resistance that provided enough SUPPLY for two months until bullish breakout took place on May 1st.

The recent lows at 1.6465 and 1.6555 (corresponding to the depicted uptrend line) prevented further bearish decline and provided enough buying pressure to keep pushing higher.

The daily chart shows two successive bullish breakouts expressed above 1.6850 (the upper limit of a previous congestion zone), then above 1.6930 (the upper limit of the ongoing bullish wedge). The bullish momentum wasn't strong enough to allow the bullish breakout to pursue towards further targets. Instead, this breakout lost its bullish momentum during the last three days of consolidation as depicted on the chart.

Price levels around 1.6990 provided evident rejection. This paused the ongoing bullish momentum (Pay attention to the last three daily candlesticks including Friday). 

The lower limit of the bullish WEDGE was broken down on Friday showing a full-body bearish daily candlestick. This enhances the bearish pull-back towards 1.6767 in the medium-term.

The nearest DAILY demand zone to meet the pair is located at 1.6775-1.6820. Bulls should be defending this price zone in order to pursue projection targets of the breakout. 

As long as the ascending bottoms established at the uptrend around 1.6675, 1.6775, and 1.6825 remain intact, the market will keep its bullish momentum.

Previously, the bearish momentum was stopped above 1.6820 (the lower limit of the bullish channel and upper limit of a previous consolidation zone).

Then the bulls managed to record a higher value above the recent one at 1.6900. However, the ongoing market demand has probably been fulfilled around 1.6990 which led to price decline again.

A short-term bearish pull-back is taking place now towards 1.6820-1.6775. 

Price action should be watched to determine if the ongoing bearish momentum is going to be contained above 1.6800 again or the reversal wedge pattern would apply bearish pressure to invalidate the bullish tendency of the market.