Key Highlights
- GBP/USD is slowly declining after it failed to clear the 1.3150 resistance.
- A crucial contracting triangle is forming with resistance near 1.3120 on the 4-hours chart.
- The US New Home Sales declined 0.4% in Dec 2019 (MoM), whereas the forecast was +1.1%.
- The US Durable Goods Orders are likely to increase 0.5% in Dec 2019.
GBP/USD Technical Analysis
This past week, GBP/USD made another attempt to settle above 1.3150, but it failed. As a result, the British Pound started a fresh decline below the 1.3120 support area.
Looking at the 4-hours chart, the pair settled below the 1.3100 support level, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).
Moreover, there was a break below the 50% Fib retracement level of the last key upward move from the 1.2962 low to 1.3174 high. However, the pair is currently finding bids near the 1.3040 area.
It seems like the 61.8% Fib retracement level of the last key upward move from the 1.2962 low to 1.3174 high is protecting further downsides. More importantly, there is a crucial contracting triangle forming with resistance near 1.3120 on the same chart.
Therefore, a clear break above the triangle resistance and then a follow up above the 1.3150 resistance is needed for the bulls to gain momentum.
On the downside, there are a couple of decent supports near the 1.3040 level. If there is a downside break below 1.3040, the pair may even struggle to stay above the 1.3000 handle.
Fundamentally, the US New Home Sales report for Dec 2019 was released by the US Census Bureau. The market was looking for an increase of 1.5% in sales in Dec 2019, compared with the previous month.
The actual result disappointing, as the US New Home Sales declined 0.4% in Dec 2019. Besides, the last reading was revised to -1.1%.
Overall, GBP/USD might continue to struggle below 1.3120 and 1.3150. Besides, EUR/USD is under a lot of pressure and it is now trading below the 1.1040 level.
Upcoming Economic Releases
- US Durable Goods Orders for Dec 2019 – Forecast +0.5% versus -2.1% previous.
- US Nondefense Capital Goods Orders Excluding Aircraft for Dec 2019 – Forecast 0% versus +0.1% previous.
