Pounds to Dollars Daily Forex Analysis

Forex Technical Analysis:  Pounds to Dollars

With a quiet day of fundamental news yesterday, the pounds to dollars pair traded in a relatively narrow range, but once again the UK pound was under pressure, failing to take advantage of the continued US dollar weakness, and ending the trading session with a narrow spread down bar, but with a deep lower shadow to the downside. The resulting hammer candle suggests that we may see a bounce higher for the pounds to dollars pair today for two reasons. Firstly, the low of the day found support from the lower level of the current trading channel, suggesting that we may see a repeat of the sideways oscillation of the last few months with a move higher once again, and secondly, with the deep lower wick, this suggest that the pounds to dollars bulls were back in the market yesterday, and buying pounds based on the recent falls and also on the technical picture. As a result we could well see a bounce back higher once again to retest the 1.67 price level once again in the medium term. With the forex markets now waiting anxiously for Wednesday’s FED statement and rate decision, we may see a period of sideways consolidation until the statement is released in the afternoon US trading session tomorrow, and should there be any supportive comments for the US dollar, such as an interest rate move in the short term rather than the medium to longer term, then this could trigger a breakout for the pounds to dollars pair from this extended period of consolidation at this price level. Only a break and hold below the lower boundary a 1.600 would indicate that the consolidation has been broken, and a new trend established, and with all three moving averages now tightly bunched, we need to wait for these technical indicators to provide some more meaningful analysis in due course for the dollars to pounds pair.

Fundamental Forex Analysis: Pounds to Dollars

With no fundamental news on the economic calendar for the UK and with only 2 minor items in the US we can expect a degree of random price moves which could provide some intra day trading opportunities.  Given yesterday’s candle I would suggest looking for small longs using the 15 min chart  using tight stops and taking profits off the table as soon as possible.