- GBP/USD failed to clear the 1.2300 resistance and started a downside correction.
- A key bearish trend line is forming with resistance near 1.2210 on the 4-hours chart.
- A successful break above 1.2250 might open the doors for a fresh increase.
- The US New Home Sales could decline 21.9% in April 2020 (MoM).
GBP/USD Technical Analysis
This past week, the British Pound failed to continue above the 1.2300 resistance against the US Dollar. As a result, GBP/USD corrected lower below 1.2200 before it found support near 1.2160.
Looking at the 4-hours chart, the pair traded as high as 1.2296 before it started a downside correction. There was a break below the key 1.2250 support zone and the pair remained well below the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours).
There was a break below the 50% Fib retracement level of the upward move from the 1.2075 low to 1.2296 high. However, the decline was protected by the 1.2160 support zone.
The pair also remained stable above the 61.8% Fib retracement level of the upward move from the 1.2075 low to 1.2296 high. It is showing recovery signs, but also facing many hurdles near 1.2220 and 1.2250.
There is also a key bearish trend line forming with resistance near 1.2210 on the same chart. A clear break and close above 1.2220 and 1.2250 might start a strong recovery wave in the near term.
Conversely, GBP/USD could fail to continue higher and it might slide further below the 1.2160 support. The next major support is seen near the 1.2100 level.
Looking at EUR/USD, the pair might also start a strong recovery as long as it is above the 1.0850 support area.
Upcoming Economic Releases
- US New Home Sales for April 2020 (MoM) – Forecast -21.9% versus -15.4% previous.
- US Consumer Confidence May 2020 - Forecast 88.0, versus 86.9 previous.