pounds to dollars

Pounds to Dollars 20 Sep 2010

Friday’s candle on the pounds to dollars pair gave us a shooting star forex trading signal which has carried through in today’s session and bringing to a halt to the recent rally in this pair.  The weight of this signal cannot be underestimated, particularly when combined with the dramatic fall in the futures market for the British Pound where we have seen open interest volumes practically halve within a week from 147k two weeks ago to 74k in data released on Friday and the significance of this cannot be underestimated.  From a technical perspective Friday’s candle has given us an excellent opportunity, although as always we need to wait for this signal to be validated and provided today’s price action continues to the downside then this appears to be the case at present.  For a definite and unequivocal and confirmation of this signal we need to see a break and hold below all four moving averages once again, followed by a breach of the lower level of the recent price congestion at USD1.5342 and should this price area be breached then look for a re-establishment of the longer term bearish trend for the pair with a consequent break below USD1.50 and onwards to USD1.4839 in due course.  The key this week will be the reaction to various significant news items in the US, not least of which is the FOMC meeting and rate decision due tomorrow and with subsequent news items potentially providing a boost for the US dollar, coupled with a potential bounce on the usd index daily chart then these factors could combine in a resurgent US dollar this week and a subsequent reversal from recent short term trends for both the pound dollar and euro dollar as a result.

Meanwhile the remainder of this week’s fundamental news for both sterling and the US dollar can now be found at my main forex trading site.