This week’s rally in the $uros to poundsr finally ran out steam as suggested yesterday, with a classic roll over pattern of four up bars all with increasingly narrow spreads – a classic signal that a move has run it’s course, and the market is telling us that a reversal is likely to follow. This has duly arrived this morning with prices falling fast in early trading – what the candles do not tell us is whether this is a temporary or longer term reversal. With prices well above all three moving averages we must now wait for confirmation from the western indicators. The first will be a break back below the 9 and 14 day averages, and it is interesting to note that the high of yesterday failed to break the resistance above at 0.9345, adding weight to the move lower this morning. The support level now set below in the recent consolidation range will prove key in any bearish move longer term, so in the short term our trades will be limited to intra day position trading and scalping, until the longer term position is clearer.

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