Pounds to Dollars - Daily Candle Chart 20th July 2009

Pounds to Dollars - Daily Candle Chart 20th July 2009

Following Thursday’s weak spinning top candle on the pound to dollars daily chart, Friday’s down candle came as no great surprise, since the spinning top is often the signal of a price reversal, which is then subsequently confirmed the following day. In this case I was expecting a three candle formation, indicative of an evening star formation, with an up bar, spinning top and subsequent down bar to complete the formation. Whilst this did occur on Friday with a down candle, it was far from convincing, ending the session with a deep lower shadow which found support from the intertwined moving averages below. Whilst it is difficult to draw any meaningful conclusions from these technical indicators, it does suggest that there is a modicum of support at this price level for the pair, and with the deep wick below we may see a rise in the pound dollar price today as a result. Longer term we need to see a break and hold above the 1.66 price point, if we are to achieve any meaningful move higher. A break below the 1.60 price region would suggest that the consolidation has broken down, and that cable is likely to fall as a result.

There is very little in the way of key fundamental news on the economic calendar today with just two items on a very quiet Monday of trading. The first of these is the Preliminary M4 money supply  figures, due out in the UK this morning and expected to show an increase to 0.4% from 0.2% last time. This data measures the change in the total quantity of domestic currency in circulation and deposited in banks, and should the figure be better than the expected is generally good news for the home currency, in this case the UK pound. This is the first of two releases of this data with the second following 14 days later Рof the two this has more significance in the market. The only other item today of fundamental news is the CB leading index, a composite index of old data, which therefore tends to have little impact on currency markets or the pound dollar pair.

You can keep up to date with all the latest fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links.  I have also included details on an excellent ECN broker.