GBP/USD Could Bounce Back, 1.2150 Holds Key27 August, 2019 by Aayush Jindal in Market Analysis
- The British Pound climbed above 1.2200, but failed near 1.2300 against the US Dollar.
- GBP/USD may well find bids near 1.2180, 1.2150, and a bullish trend line on the 4-hours chart.
- The US Durable Goods Orders jumped 2.1% in July 2019, more than the +1.1% forecast.
- The US Consumer Confidence (CB) could decline from 135.7 to 129.5 in August 2019.
GBP/USD Technical Analysis
After a strong decline, the British Pound found support near 1.2030 against the US Dollar. The GBP/USD pair started an upside correction and traded above the 1.2200 resistance area.
Looking at the 4-hours chart, the pair settled nicely above the 1.2150 pivot level and the 100 simple moving average (red, 4-hours). It opened the doors for more upsides above the 1.2200 and 1.2250 levels.
The pair even climbed above the 1.2280 level, but it faced a strong resistance near the 200 simple moving average (green, 4-hours). Moreover, there is a major bearish trend line forming with resistance near 1.2360 on the same chart.
At the outset, the pair is correcting lower below 1.2280 and 1.2250. There was a break below the 38.2% Fib retracement level of the recent wave from the 1.2108 low to 1.2292 high.
However, there are many important supports on the downside near 1.2180, 1.2160, and the 50% Fib retracement level of the recent wave from the 1.2108 low to 1.2292 high. Additionally, there is a connecting bullish trend line in place with support at 1.2150 on the same chart.
Therefore, the pair could find a solid buying interest near the 1.2150-1.2160 area. As long as GBP/USD is above 1.2150, it could bounce back towards the 1.2300 resistance. Conversely, a downside break below 1.2150 will most likely push the pair back towards 1.2050.
Fundamentally, the US Durable Goods Orders report for July 2019 was released by the US Census Bureau. The market was looking for a 1.1% rise in orders compared with the previous month.
The actual result was well above the forecast, as there was a 2.1% rise in orders. On the other hand, the US Durable Goods Orders ex Transportation declined 0.4%, whereas the market was looking for a 0.1% rise.
The report added:
Excluding defense, new orders increased 1.4 percent. Transportation equipment, also up two consecutive months, drove the increase, $5.7 billion or 7.0 percent to $86.3 billion.
To sum up, GBP/USD could bounce back as long as it is above 1.2150, but EUR/USD might continue to face hurdles near 1.1160, 1.1180 and 1.1200.
Upcoming Economic Releases
- German Gross Domestic Product for Q2 2019 (YoY) – Forecast 0%, versus 0% previous.
- German Gross Domestic Product for Q2 2019 (QoQ) – Forecast -0.1%, versus -0.1% previous.
- US Consumer Confidence August 2019 – Forecast 129.5, versus 135.7 previous.