GBP/USD Weekly Candle Chart 23rd February 2009

Unfortunately the weekly candle chart tells us very little, either in the way of a new signal, or confirming anything that has gone before, ending the week with a narrow spread spinning top doji. In the last 14 weeks we have seen two bearish engulfing signals and one bullish engulfing, so on the balance of probability we are looking for a bearish move out of the current sideways trend. This is not a scientific analysis, but simply a statement of how the market has reacted in the past few weeks, and whether we have more bullish signals or bearish signals in the period. It does not change the fact that we still have to wait for a confirming signal to any indication of a move one way or the other before we trade, but simply provides another pointer to hold in background memory, once a move does start. The only other conclusion we can draw from last week is simply that the weekly candle closed below all three moving averages without penetrating once. I have covered the fundamental news on the US dollar for you on the euro to dollar site , and there is a complete economic calendar of this weeks main announcements here.

The main news for the UK pound starts on Tuesday, with the release of the CBI Realised Sales. This is what is known as a diffusion index, and is based on a survey of retailers and wholesalers which asks respondents to rate the relative level of current sales volume, with a figure above 0 indicating higher sales, and below 0, lower sales. It is generally considered to be a leading indicator of consumer spending because retailer and wholesaler sales are directly influenced by consumer buying levels. The forecast this time is for -52 against a figure last time around of -47, so clearly the economic picture for retailing is getting worse, which probably comes as no great surprise!

Wednesday morning brings the revised GDP figures which represents the change in the value of all goods and services produced by the economy. If the actual is better than forecast then this is usually good for the home currency, in this case the UK pound.With three releases of the same figures ( Preliminary, Revised and Final) this is the second most important after the Preliminary with a forecast of -1.6% against a previous of -1.5%.

Thursday starts early, with the Nationwide HPI data, which is essentially the change in the selling price of houses with a mortgage backed by the Nationwide. This tends to be a leading indicator and if the figures are better than forecast, then this is generally good for the UK pound. The forecast is -1.2% against a previous of 1.3%.  It’s a leading indicator of the housing market since rising house prices attract investors and spur industry activity. As this is the second report for the housing market ( the first being the Halifax) it can have a significant effect. This is followed later in the morning by a speech by the BOE Governor Mervyn King who is due to testify, along with Executive Director for Markets Paul Tucker, on the banking crisis before Parliament’s Treasury Committee, in London. The market will look for any clues as to future rate cuts and this really ends the week of news, as there is little to report on Friday for the UK pound. My suggestion for any long term trading in the GBP/USD at the moment is to wait and see I’m afraid, until we have some clear long term signals!

The short term and medium term are sideways, the long term is bearish.