GBP/USD Could Recover from Oversold Conditions08 May, 2018 by Aayush Jindal in Market Analysis
- The British Pound declined sharply during the past few days and broke the 1.3700 support against the US Dollar.
- There is a key bearish trend line forming with resistance at 1.3650 on the 4-hour chart of GBP/USD.
- The Euro Zone Sentix investor Confidence Index for May 2018 declined from 19.6 to 19.2.
- Today, UK’s Halifax House Price Index for April 2018 will be released, which is forecasted to decline 0.2% (MoM).
GBPUSD Technical Analysis
The British Pound faced a lot of selling pressure recently and declined below the 1.3700 support against the US Dollar. The GBP/USD pair even traded a few pips below the 1.3500 support and is currently correcting higher.
Looking at the 4-hours chart, the pair is trading well below the 100 (red) and 200 (green) simple moving averages. It traded as low at 1.3483 and is currently consolidating losses. On the upside, an initial resistance is near the 38.2% Fib retracement level of the last drop from the 1.3792 high to 1.3483 low.
Moreover, there is a key bearish trend line forming with resistance at 1.3650 on the 4-hour chart of GBP/USD. Therefore, if the pair corrects higher, it could face sellers near the 1.3600 and 1.3650 resistance levels.
On the downside, the 1.3500 support holds a lot of importance. A break and close below 1.3500 may perhaps ignite further losses toward 1.3450.
Recently in the Euro Zone, the Sentix investor Confidence Index for May 2018 was released by the Sentix GmbH. The market was looking for a rise from the last reading of 19.6 to 21.1.
The actual result was a bit disappointing as there was a decline in the Sentix investor Confidence Index from 19.6 to 19.2. This means the index fell for the 4th consecutive time and now stands at 19.2 points. It is one of the lowest reading since 02.17.
The report added:
The assessment of investors in Germany is also experiencing the fourth consecutive damper, which is due to a stronger decline in the assessment of the situation.
The Euro came under pressure and declined versus the US Dollar. Similarly, GBP/USD remains in a bearish zone and at a risk of more declines.
Economic Releases to Watch Today
- Germany’s Industrial Production for March 2018 (MoM) – Forecast +0.8%, versus -1.6% previous.
- Germany’s Trade Balance for March 2018 – Forecast €20.0B, versus €19.2B previous.
- UK Halifax House Price Index for April 2018 (MoM) – Forecast -0.2%, versus +1.5% previous.
- UK Halifax House Price Index for April 2018 (3m/YoY) – Forecast +3.3%, versus +2.7% previous.
- US IBD/TIPP Economic Optimism Index for May 2018 (MoM) – Forecast 51.3, versus 52.6 previous.