We are now entering a significant area of the daily chart for the $uros to poundsr, as we are now approaching the strong support area in the 8950 – 9000 region, which may well dictate the future direction of the currency pair in the medium term, with yesterday’s wide spread down bar adding to the bearish sentiment of the last nine days. More significantly the close of the day finished below the 40 day moving average adding further weight to a move lower, and I hope you followed my suggestion of yesterday to trade short positions on an intra day basis. If this move is to continue then this region will have to be broken, and with momentum behind the move. If this is not the case, then the support level may hold firm and we could see a rebound back higher in the short term once again as trading once again resumes between the levels shown on the daily chart. A consensus view of professional traders is that this may well be the case, and we could see a move higher once trading volumes return to normal after the long weekend break, and from this morning’s trading so far, this would seem to be a possibility, with a small test lower having bounced higher this afternoon.

My suggestion for today, is to step aside from this market until early next week when we should have a much clearer picture. If the support level remains unbroken then we could see a bounce higher with a move lower only confirmed once the 0.8745 region has been passed and there is clear water above. Tomorrow of course, on the economic calendar, we have the MPC statement ahead of the Easter break for the UK pound. It is widely expected that rates will remain on hold at 0.5%, so no change, which I suspect has already been factored in to the market, and with many traders closing positions early, the effect of any decision is likely to be muted.

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