Pound Dollar Daily Candle Chart - 3rd February 2009

Pound Dollar Daily Candle Chart - 3rd February 2009

Monday’s candle would suggest that the key resistance area at 1.4500 is likely to remain intact in the short term, as following Friday’s wide spread up bar, the pound dollar pair opened gapped down in early trading on Monday, with prices sliding during the day, and finally rallying overnight. The moving averages have closed again, and yesterday’s price action crossed both the 9 day and 14 day averages. The significant point to make is that the resistance level has not been breached, and we can only start to trade with confidence once we have established the trend for the short term. My suggestion would be to stay out of the pair today and wait for a confirming signal to appear before re-entering in the short term and probably wait until after Thursday and the release of the BOE interest rate decision.

The only siginifcant fundamental news out later today is in the US this afternoon with the release of the Pending Home Sales figures, and more details can be found at the euro to dollar site.

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