GBP/USD Daily Candle Chart - 31st March 2009

GBP/USD Daily Candle Chart - 31st March 2009

The British Pound has, so far, failed to show any significant bullish momentum following yesterday’s hammer candle on the daily chart and worse than expected US fundamental news in today’s economic calendar, and which tends to suggest that the bearish tone is still very much in play.  With all the moving averages converging analysing the daily chart is becoming increasingly difficult and I suspect that we will see little change to the sideways movement until tomorrow when the ADP non farm employment figures are released which are often an excellent guide to the non farm payroll figures for Friday.  In addition tomorrow we have two other red flat indicators in ISM and Pending Home Sales, followed by the crude oil inventories and on the back of Halifax HPI and manufacturing PMI in the morning for the British Pound, so all in all a very busy day with 6 significant pieces of data.  According to our own ECN broker market volumes are thin as traders look to square quarterly positions.

From a technical perspective the monthly chart for cable is probably the most interesting one to look at present and which I have included in this post as we have three strong signals, in particular January and now March which are both long legged doji suggesting indecision and the possibility of a reversal from the steep fall of the last 5 months.  Based on this chart alone I would suggest that the longer term outlook for cable is for a move higher but clearly at this stage it is difficult to predict when this is likely to happen.

Pound vs Dollar - Monthly Candle Chart 31st March 2009

Pound vs Dollar - Monthly Candle Chart 31st March 2009

My trading suggestion for today is to wait and see as I believe even battle hardened intra day traders will find it difficult to identify suitable trading opportunities until the medium term direction has evolved.

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