Dollars To Pounds - Pound vs Dollar Daily Chart 17th June 2009

Dollars To Pounds - Pound vs Dollar Daily Chart 17th June 2009

It is in man’s nature to try to create order from apparent chaos and this is particularly true in technical analysis where we often use lines, shapes and patterns in order to either support our views or try to predict an outcome.   Some may argue that the current sideways consolidation we are witnessing in the dollars to pounds currency pair is merely the prelude to a triangle or pennant formation, or even the start of a head and shoulders pattern and in view one could make a case for both scenarios.  The key point from yesterday’s candle is that the tone of the trading session was mildly bearish with the attempted rally squeezed lower by the Dollar bulls and closed the day marginally above both the 9 and 14 day moving averages which are now superimposed on one another.  This morning’s price action has followed an almost identical pattern suggesting once again that the pair are now looking inherently weak as the rally fails to respond to any upwards momentum.  It now appears that the resistance level in place at 1.66 will provide a significant challenge if we are to see a further move higher whilst below the current consolidation the support level at 1.59 will prove critical.  If this latter region is pierced, along with a break below the 40 day moving average, then this could signal a much deeper move possibly even as far as a re-test of support in the 1.53 price region.   The fundamental on the economic calendar for the British Pound has been dominated by the unemployment figures which showed a further rise to 2.26m in the three months to April, the highest number of unemployed since November 1996 with the jobless rate climbing to 7.2% which was marginally better than forecast at 7.3%.  The only other item for the UK were the MPC minutes which showed that the breakdown of votes for the last interest rate decision was as expected at 0-0-9 – a unanimous decision to keep rates on hold.  All the items of news for the US Dollar can be found on the main Eurodollar site.  My trading suggestion is to look for small short positions using the hourly chart to time your entry and exit points.

You can keep up to date with all the latest fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links.  I have also included details on an excellent ECN broker.