Pound Dollar Daily Candle Chart - 19th March 2009

Pound Dollar Daily Candle Chart - 19th March 2009

The pound’s reaction to yesterday’s dramas in the currency markets was to move 200 pips higher which would normally be seen as a positive signal but when compared with the reaction of other currency pairs to the FED’s quantitative easing by buying long term Treasuries and mortgage backed securities, the result is less than impressive.  Although still encased within the sloping down ward wedge of lower highs the pounds has nevertheless managed, at least, to rise above all three moving averages.  This muted bullish momentum may just be enough to take it through the 1.45 resistance level.

My trading suggestion today is therefore, to attempt small longs, buying on any dips in the hourly chart with a view to closing out at around 1.45.  Stop loss at 1.4320 or lower.  By Monday when the froth has disappeared from the top of the coffee we should have a clearer idea of whether the pound is likely to break out of its straight jacket.

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