GBP/USD - Daily Candle Chart 19th February 2009

GBP/USD - Daily Candle Chart 19th February 2009

The doji cross candle from yesterday provided little in the way of a signal, other than telling us that the market in cable is undecided at the moment. Four of the last five candles have touched the same point in the daily chart, just above 1.4100, suggesting that this is forming a resistance to lower prices in the short term. For those of you new to trading and using candle stick analysis, this is an important detail to note, as the significance is often lost in the bigger moves or more dramatic patterns. As you can see, the lowest price for Thursday, Monday, Tuesday and now Wednesday are all virtually identical. This is a warning signal and hence my advice to you yesterday to stay out and watch. In the next day or so we may see prices rise, and for any long term trend to be established we would need to see the resistance at 1.4400 breached followed by support from the moving averages. My guess is that if we do see a reversal, this will only be a temporary move, before the bearish trend is established once again.

The fundamental news for today is mainly in the US and you can find full details on the euro to dollar site. This morning we saw the Public Sector Net Borrowing data released in the UK, which is the difference in value between spending and income for public corporations, the central government, and local governments during the previous month.  A positive number indicates a budget deficit, a negative number indicates a surplus and it came as no surprise that these came in at -3.3B against -6.9B last time. My suggestion for today is to stay out of the market until we have a clear trading signal.

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