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Pounds To Dollars – Daily Candle Chart 10th March

Pounds To Dollars - Daily Candle Chart 10th March 2009

Yesterday’s dramatic 400 pip fall has been attributed to the decision to start quantitative easing and to be honest came as a great surprise to many, including myself, particularly as the day was bereft of any fundamental news.  Yesterday’s price action is another example of the extreme volatility and random price movements that we are seeing across the currency markets, which are being exacerbated by thin trading volumes.

Whilst it would be tempting to jump in and trade short I would advise a degree of caution as you can see there has been an immediate reaction to this large fall.  My own suggestion remains as before which is to wait until prices reach the 1.35 region and if this is breached then to short the pound dollar pair as we may see a move lower down in the 1.20’s.  As always I would wait for the appropriate signals in both the daily and weekly charts.  As I have said many times before never trade on the strength of one candlestick.   As an indication of the contrary nature of the markets at the moment the appalling manufacturing data released this morning in the UK actually resulted in a rise in the value of the pound vs the dollar.

This afternoon’s presentation by Ben Bernanke entitled “Financial Reform To Address Systemic Risk” in Washington may provide some volatility.

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