Friday’s up candle confirmed the bullish engulfing signal outlined in Friday’s market commentary, with the euro pound closing the day above both the 9 and 14 day moving average and well above the previous resistance level at 0.890, suggesting that we could see a further move higher in due course.  The strength of this move is likely to be governed by two aspects on the daily chart, firstly the strong resistance level in place at 0.90 and secondly by the weight of the 40 day moving average which is currently still above the daily price.  If these two elements are confirmed in an upwards move then we should be able to trade the long side with some confidence and look for a re-test at the 0.925 region with a possible move back to 0.945 in due course.  My only caveat is that on the weekly chart we are in a strong consolidation region with a base at 0.88 and a top at 0.90 in a very tight range with the 9 and 14 week moving averages virtually overlaying, so with no strong signals either in the daily or weekly chart we need to be cautious in our trades and look for small profits with tight stop losses inter-day with a bias to the long side of the market.

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