Pounds To Dollars Daily Chart - January 27th 2009

Pounds To Dollars Daily Chart - January 27th 2009

Yesterday’s daily candlestick on the pound dollar currency pair was interesting for two reasons. Firstly the market opened gapped down in the morning, indicating a possible move lower, and secondly the up candle which subsequently formed now provides a bullish engulfing signal for that of Friday. Following on from the three consecutive dojis candles ( indecision in the markets and therefore possible turning points), all of which could be classified as hammers, it was no surprise to see the pound dollar currency pair rise yesterday, after the UK economy and the pound in particular had been written off by so many people. Whilst the longer term trend is still bearish, there is an opportunity for long trades, based on the signals of the last few days, so my suggestion would be to try small longs with stops below the 1.35 support level which has been created in the last few days. If prices do break above 1.40, then look for a move back to test resistance at 1.4450, a strong level which will need considerable effort to be penetrated.

The CBI realized data released at 11.oo this morning fell below analaysts expectations at -47, the forecast having been for -53 against a previous of -55. This is an indicator which surveys retailers on their relative levels of sales voulme and therefore provides a view of consumer spending and sentiment. A figure above 0 indicates higher sales volumes and below 0 shows lower sales. The news this morning could therefore be considered slightly more positive than expected since the fall was less than forecast. The GBP/USD rose on the news only to fall back almost immeditely weighed down with the broader economic problems.

The short term outlook is bullish, with the medium to long term bearish.