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Euro Pound – 18th February 2009

Yesterday gave us a wide spread down bar in the daily chart, which suggests that the bearish tone is now back in place, with the candle crossing below all three moving averages and failing to penetrate back into the 0.9000 region. With the failed test above and the moving averages having been crossed this is suggesting that we can expect a move lower in the next few days. The candle of yesterday has cleared the previous support region at 0.89, and I am expecting prices to fall to 0.8400 in the next few weeks. As I have mentioned several times before the euro is heavily overbought against the pound, and by the summer I would expect to see the price for the $uros to poundsr somewhere in the 0.78 to 0.76 region. The $undamental newss morning had little impact on UK sterling and I have detailed this on the pounds to dollars site. My suggested trade for today is small short positions, with a stop loss above the open of yesterday.

The short term and medium term outlook is bearish, and the long term is sideways.