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Pounds To Dollars – Daily Candle Chart 8th February 2009

GBP/USD Daily Candle Chart - 8th April 2009

With yesterday’s candle closing up on the day, and with the low of the day failing to penetrate any of the moving averages, we must therefore conclude that the bearish engulfing signal of Monday was false, and can therefore be ignored for the time being. However, it is also important to note that with very thin trading volumes ahead of the long weekend, and with very little in the way of fundamental news, many of the currency markets are trading sideways this week, with volatile reactions on small items of news, or a lack of reaction to more significant developments, making trading extremely difficult and negating many of the typical charting signals. If this is indeed a false signal then we can expect to see a move higher in due course, with a break above 1.5040 being the next significant level to be breached, and if so we could see a move higher to retest the 1.5460 region and beyond in due course. However as I have outlined in other market commentaries this morning as we approach the earnings season in the US, we could see the appetite for risk diminish with a subsequent strengthening of the US dollar against other major currencies, but with many markets closed over the long weekend we are unlikely to see this effect before the early part of next week.

The main fundamental news on the economic calendar today is in the US, with the crude oil inventories and the FOMC minutes from the last FED meeting due out later. My suggestion for today is to look for small long trades,  intra day in the 15 minute and 30 minute charts, and in particular look for hammer candles as your entry point.

You can keep up to date with all the latest currency news, live currency charts and fundamental news by simply following the appropriate links, and if you are looking for a good ECN broker I have provided more details here.