Pounds To Dollars Daily FX Chart - GBP/USD 28th May 2009

Pounds To Dollars Daily FX Chart - GBP/USD 28th May 2009

A fascinating chart for all us interested in technical analysis and for those of you who are not the next paragraph may seem rather dull and unexciting!  So why is the dollars to pounds daily chart so interesting?  Let me count the ways; first yesterday’s candle was a classic shooting star at the top of a long bull rally characterized with a long upper shadow and narrow body with the open and close virtually identical.  Second this candle followed on the back of three consecutive bearish signals, two of which would be classified as “hanging men” reversal candles.  If we put all three signals together we have a powerful combination of signals suggesting that all is not well in the bullish trend and that we could now be looking at the start of a bearish reversal with a longer term move lower.  In addition in this morning’s London session and into the New York open we seem to be forming a similar hanging man candle once again with a deep lower wick and narrow body.  Without wishing to jeopardize my reputation for chart reading I will be amazed if we do not see  a fall from this level but we now have to wait for a confirming down bar and a break below 1.5755 coupled with a breach of the 9 day moving average.  All the fundamental news on the economic calendar for the US dollar is covered in the main euro dollar site.  With regard to the UK other than CBI realised sales which came in worse than expected and confirmed that trading conditions continue to be very difficult there is nothing of any significance until tomorrow when the Nationwide HPI data is released.

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