We were wise to stay out of the market yesterday following the two doji cross candles, as the market rose, ending the day with a wide spread up bar for the $uros to poundstrong>currency, the closing price of which is just touching the 9 day moving average. This morning has seen this penetrated as the UK pounds weakens again on the news from the UK and the BOE statement from Mervyn King – the word ‘deep’ recession probably hasn’t helped! It seems that the bearish trend of the last two weeks has now been reversed temporarily, as the old pattern of a strong euro and weak pound comes back into play. In the longer term my view remains the same, in that the euro is overbought against the UK pound, and that in the next few months we will see the pair move lower. In the short term I would wait until we see a confirming signal for our trading for the next few days, and for today stay out of the market.

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