Trading Currency - Daily Chart GBP/USD 7th April 2009

Trading Currency - Daily Chart GBP/USD 7th April 2009

The rally in the pounds to dollar pair was brought to an abrupt halt yesterday with a wide spread down bar and with the high of the day failing to penetrate the psychological 1.5000 barrier which now brings to 3 the number of failed attempts to breach this level in the last 3 months as shown on today’s daily chart.  In addition the wide spread down bar has provided a bearish engulfing signal on the day suggesting that we may see a reversal in the short term, but this will need to be confirmed with any break below 1.4525 coupled with crossing of the moving averages and until these effects are seen we cannot be certain whether this reversal will be confirmed or is merely profit taking ahead of a move higher.

The fundamental news on the economic calendar this morning for cable was dominated by manufacturing production which came in slightly better than expected at -0.9% against a forecast of -1.4% and represents an easing of the decline in British manufacturing although one should note that this has now fallen for the last 12 consecutive months.  At the same time the British Chamber of Commerce also announced that manufacturing exports had reached a 10 year low and warned that unemployment could peak at 3.2 million next year.   I have covered the US data in more detail on the euro to dollar site.

Just as with other currency pairs trading this week is tricky given the thin volumes as traders close positions ahead of Friday’s national holiday and any trading opportunities are restricted to the shorter time frames of not less than 15 minutes.  As usual you should only enter trades on strong signals such as hammers and dojis, use tight stops and take any profits as soon as possible.

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.