GBP/USD is Eyeing Upside Break above 1.295028 August, 2018 by Aayush Jindal in Market Analysis
- The British Pound made a nice upside move and traded above 1.2800 resistance against the US Dollar.
- There is a key bearish trend line in place with resistance at 1.2900-1.2920 on the 4-hour chart of GBP/USD.
- The US Dallas Fed Manufacturing Business Index in August 2018 declined from 32.3 to 30.9.
- Today, the US Wholesale Inventories for July 2018 (preliminary) will be released, which is forecasted to rise 0.1%.
GBPUSD Technical Analysis
After a continuous decline, the British Pound found support near the 1.2660 level against the US Dollar. The GBP/USD pair started a decent recovery and moved above the 1.2700 and 1.2800 resistance levels.
Looking at the 4-hours chart, the pair climbed above the 23.6% fib retracement level of the last decline from the 1.3213 high to 1.2661 low. The pair even broke the 1.2900 resistance once and attempted a close above the 100 simple moving average (red).
However, the upside move was capped by the 50% fib retracement level of the last decline from the 1.3213 high to 1.2661 low at 1.2935. The pair dipped and tested the 1.2800-1.2820 support area.
Later, there was a fresh upside move towards a key bearish trend line with resistance at 1.2900-1.2920 on the same chart. If there is a 4-hour close above the trend line and the pair breaks the 1.2935 level, there could be more gains towards the 1.3000 level and the 200 simple moving average (green, 4-hours).
On the other hand, if the pair corrects lower, the 1.2840 level is an initial support followed by the 1.2800 pivot level. Any further losses could push the price back towards the 1.2750 support.
Fundamentally, the US Dallas Fed Manufacturing Business Index for August 2018 was released recently. The market was looking for a rise from the last reading of 32.3 to 36.9.
The actual result was on the lower side as the business index declined from 32.3 to 30.9. However, the production index, an important measure of state manufacturing conditions, remained stable at 29.3.
Overall, it seems like there could be more gains in GBP/USD and EUR/USD in the short term.
Economic Releases to Watch Today
- US Wholesale Inventories for July 2018 (preliminary) – Forecast +0.1%, versus +0.1% previous.
- S&P/Case-Shiller Home Price Indices for June 2018 (YoY) – Forecast +6.5%, versus +6.5% previous.