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Durable goods orders in the US decreased by 2.1%, greatly exceeding the forecasted increase of 0.6%. At the end of the European session, new home sales data was released in the United States, which was unexpectedly positive.
New home sales increased by 5.8%, despite analysts forecasting sales to decline by 5%.
How did the market react to this data release?
Market players ignored the new home sales data, with trader activity being very low ahead of Christmas.
The EUR/USD pair has been moving within the sideways range of 1.0580/1.0660 for the second consecutive week, which indicates an accumulation process. Furthermore, it signals that traders are uncertain about the pair. However, this is the final week of 2022, which means trader activity is muted.
GBP/USD performed a downward correction from the peak of the uptrend and reached the psychological level of 1.2000. Afterwards, the pair bounced off its supports, reducing the volume of short positions. From December 15 to December 22, the pound sterling lost about 450 pips, suggesting that it might be oversold on the daily time frame.
All major exchanges are closed today for Christmas, and trading is almost completely closed.
Regular trading will steadily begin on Tuesday, December 27.
With no key players being in the market, the trading volume will decrease, affecting volatility.
The range-bound market may lead to major movements in the future. In this situation, the best course of action is to wait for the price to settle outside the range. The resulting technical breakout signal will indicate the direction of the pair's movement.
The technical analysis remains unchanged:
A bullish scenario will be considered by traders if the price consolidates above 1.0670 on the four-hour chart. In this case, the volume of long positions will increase, and the price may rise above the local high of the upward cycle.
A bearish scenario will be relevant if the price consolidates below 1.0570 on the four-hour chart. In this case, the price is expected to return to the area of 1.0500.
If the pair fails to break below the psychological level, GBP/USD could rise steadily. In this scenario, the level of 1.2150 could become the target for bullish traders.
As for the subsequent downward move of the correction cycle, the continuation signal will be created if the pair settles below 1.1950 in the H4 time frame.
The candlestick chart shows graphical white and black rectangles with lines from above and below. While conducting a detailed analysis of each individual candlestick, one can notice its features intrinsic to a particular time frame: the opening price, the closing price, as well as the highest and lowest prices.
Horizontal levels are price levels, at which the price may stop or reverse. They are called support and resistance levels.
Circles and rectangles are highlighted examples where the price reversed in the course of its history. This color highlighting indicates horizontal lines, which can exert pressure on the quote in the future.
Up/down arrows signal a possible future price direction.
EUR/USD and GBP/USD: trading plan for beginners on December 23, 2022
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