Pound Dollar Chart 30 March 2010

The pounds to dollars pair continued its modest recovery yesterday as cable attempted to find some traction from the USD1.48 price level which is now pivotal to the medium term trend.  Yesterday’s narrow spread up candle closed well below all four moving averages once again, and despite this morning’s further upwards move (on the back of revised growth figures for the UK) the overall picture still remains heavily bearish with any short squeeze likely to run out of steam.  With the deep price congestion above and both the 40 day and 200 day moving averages adding further downwards pressure the peak of any rebound is likely to stall in the USD1.52 region and from here we should expect to see a sharper move lower as a result.  The depth of any move will be dictated by the USD1.48 price handle and if this is breached then our medium term target of USD1.45, followed by USD1.40 in the longer term should both be achieved. Any rally higher should be seen as opportunities to open short positions in advance of any pullback from USD1.51.

Other than today’s revised Q4 GDP figures for the UK which came in marginally better at 0.4% against a forecast of 0.3%, the only other item of news is in the US this afternoon with the release of CB Consumer Confidence data forecast to show an improving picture once again at 50.1, up from 46 the last time.

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