An interesting day technically for the euros to pounds pair which once again struggled to break and hold above the 0.93 price region, and ending the day with a doji candle, which closed above all three moving averages once again, and with the low of the session finding some support from the 9 day moving average once again. Whilst the bullish tone remains firmly in place, for intra day traders there may be an opportunity to benefit from the tweezer top created with yesterday’s candle, which if confirmed could signal a short term reversal lower in the next day or so, before moving higher once again in the medium to long term, and for euros to pounds bulls, this level is now critical. A break and hold above 0.93 is required to see the trend continue unbroken, and once we have cleared this level then 0.96 and beyond are the next likely targets for the pair. However, given the bearish tweezer top now in place, we may expect to see a short term pullback in the daily chart before the pair continue to move higher.

The strong bullish signals of last week duly delivered on Monday and Tuesday, with the euros to pounds pair surging higher once again, and recovering the lost ground following the dark cloud over signal which created the initial move lower. The most encouraging signal for euro bulls is that the strength of the move is now well established indicated by the 9 day moving average which is providing excellent support as we move higher with yesterday being a classic example with the low of the trading session bouncing off the average once again. With all three moving averags pointing firmly higher, the only issue now is how far will the euros to pounds pair go in this move before the market takes a breather once again, and the first point is a break and hold above the dark cloud candle at 0.93. Once this is breached then we have a virtually clear run back to re-test the previous high of 0.96.  Should this level fail to hold then then parity becomes a distinct possibility particularly if Sterling continues to suffer as seems likley.  So from a technical perspective the tone remains firmly bullish in the short to medium term for the euros to pounds pair.  With no significant fundamental news on the economic calendar for either the UK or Europe other than some second tier releases the market now waits for tomorrow’s interest rate decisions for both Sterling and the Euro.  In the meantime Sterling has continued its slide on the Sterling Index as economic recovery in the UK continues to stutter and splutter.

Yesterday’s candle chart for the euros to pounds pair has provided us with a strong buying signal, ending the day with a deep hammer candle which closed the trading session with a narrow body and deep lower wick indicating that the euro bulls are buying in force and on any deeper move lower, indicating that the bullish trend remains firmly in place. This analysis is further confirmed by the support the pair found yesterday from the 9 day moving average, always a good indicator that the sentiment in the move remains unbroken, and as such we should see a strong bounce higher in the next few days if this excellent signal is confirmed today. The key of course will be whether the euros to pounds pair manages to break above the dark cloud over candle of Monday, and is so then we should expect to see a continuation of the upwards progress of the last few weeks, ultimately breaking through the strong resistance ahead and into the calmer waters above in the 0.95 region and beyond.

There are several items of news on the economic calendar today for the euros to pounds pair which starts with German Retail Sales which are expected to remain flat at 0.0% down from last months more positive figure of 0.7%, which is then followed by the European Final Manufacturing PMI data which is forecast to remain flat at 49, as for last time. The same data set is also being released in the UK shortly after with a slightly better forecast for the UK of 50.2 against a previous of 49.7. This data is followed by a report from the Bank of England which is released quarterly and provides an overview of credit conditions in the UK, which may show once again that credit is still not flowing into the banking system, with many preferring to pay off existing loans and credit cards and not to spend, as is the case in the US markets at present. Finally, throughout the week we have the Halifax HPI data which provides a view on the UK housing market for the euros to pounds pair.

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.

Monday’s “dark cloud over” pattern was duly validated yesterday with a wide spread down candle on the euro pound chart for the euros to pounds pair, however, before we assume that the bullish rally is over for the time being, there are two interesting aspects to yesterday’s price action which may provide some clues for the likely direction in the short term. The first of these is the support that the euros to pounds pair found from the 9 day moving average, which suggests once again that the bullish sentiment remains firmly in place, and always a good signal in a rising trend. Secondly, yesterday’s candle ended the trading session with a relatively deep lower wick, indicating that euro buyers are still predominant in the market and absorbing the selling on any reversal lower – again a positive signal. Indeed in this morning’s early trading the euros to pounds pair seems to have found support once again from the 9 day moving average. Given that all three moving averages are pointing sharply higher, and with the analysis outlined above, my trading suggestion for today is to look for buying opportunities on any further short term reversals as we look to punch higher in due course, with 0.95 as our initial target, but for a firm confirmation we need to see a break and hold above the dark cloud of Monday to be sure. If we can break above this region, and through the current congestion over the next 200 pip range then we should see a run towards the previous high of last year for the euros to pounds pair, particularly if the UK pound continues to trade with a bearish tone, and helped along by the BOE’s words and actions.

All the fundamental news on the economic calendar for today is relatively minor and therefore unlikely to create big price moves as a result, with the main news in Europe being the German Unemployment Change which is forecast at 19k against a previous os -1k, and CPI Flash Estimates which are expected to come in at -0.2%, the same as last time. For the UK there is only on item, the Index Of Services, a low level piece of fundamental news which is unlikely to stress the markets.

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.