Following the strong  move higher on Thursday for the $uros to poundsr, Friday’s wide spread down bar with a very deep upper wick brought the temporary reversal to a shuddering halt, and indeed this downwards pressure has continued in trading today. The key point from Friday is that the high of the day bounced off the 40 day moving average, which once again, has provided the barrier to any move higher as we saw back in late April and again in early May, suggesting that the upwards move was only temporary, and that the bearish picture remains firmly in place. This price action has been replicated again in trading during the London and New York sessions, with an attempt to rise failing once again, leaving a deep upper wick on the candle, suggesting a move back to 0.86 in the short term and a re-test of support at 0.85 in the medium term.

Having made a strong technical case for a move lower, I am less convinced by the weekly chart for the pair, with a long legged doji on the chart, normally indicating indecision in the market and therefore a possible turning point in due course. Naturally time will tell, but with the body of the candle resting lightly on the 40 week moving average, then it would not be a great surprise to see the pair reverse higher again later in the week, so perhaps not quite the clear picture we first thought!

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