Pounds vs Dollar - Daily Candle Chart 7th July 2009

Pounds vs Dollar - Daily Candle Chart 7th July 2009

Yesterday’s daily candle on the pounds to dollars chart provided us with some interesting talking points for analysis which came as a surprise following the bearish shooting star outlined in last week’s market commentary.  Yesterday’s candle closed the session with a deep lower wick and a small upper body suggesting that despite the bearish tone evident in early trading this was subsequently reversed by Sterling bulls who drove the GBP/USD pair higher later in the day.  Technically the candle found good support from the 40 day moving average, a picture that may well be replicated again today, which would seem to indicate that the pair are not yet ready to turn lower, and we may well see a move higher back above the 9 and 14 day moving averages in the short term, as a result.   For any longer term rally to the upside the 1.66 price point still remains pivotal, and should we see a break and hold above this level on the weekly chart then we may consider the pair to have turned.   With no fundamental news on the economic calendar for the US this morning was limited to a couple of releases in the UK both of which came in worse than expected.  The first of these was Manufacturing Production at -0.5% against a target of 0.1% coupled with Industrial Production which fell to -0.6% against a forecast of +0.2%.  With markets now waiting for the G8 all we can expect is some further sideways consolidation.

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