FX.co ★ GBP/USD Intraday Technical Analysis &Trade Recommendations for January 20, 2012

Last Friday GBP/USD declined rapidly towards 1.5233 to test the lower limit of the bearish channel marked on the chart.
Although it recorded a new low at the previously mentioned price level of 1.5233, it couldn't stabilize below 1.5278 showing massive bullish reaction towards the lower limit of the channel.
This week we mentioned that we have an inverted 'Head & Shoulders' reversal pattern, as we had obvious closure above the neckline 1.5400 targeting to the upper limit of the channel.
Yesterday, we suggested buying GBP/USD at 1.5380 which is the retest of the neck-line but unfortunately the pair didn't reach that price before its upside movement.
It's important to note that the pair has a good resistance "Supply" zone between 1.5480-1.5540 which is also the upper limit of the marked bearish channel.
The pair has visited 1.5480 and no bearish reaction is noticed till now so price action towards 1.5540 should be watched for a confirmation to take a short position.

Based on the previous analysis:

Price action around 1.5540 should be monitored for the expected bearish power to enter the market.
SL should be daily closure above 1.5480 & TP should be located at 1.5500, 1.5430 and 1.5380 with a possibility to extend our TP down to 1.5280.