Monday’s “dark cloud over” pattern was duly validated yesterday with a wide spread down candle on the euro pound chart for the $uros to poundsrong> pair, however, before we assume that the bullish rally is over for the time being, there are two interesting aspects to yesterday’s price action which may provide some clues for the likely direction in the short term. The first of these is the support that the euros to pounds pair found from the 9 day moving average, which suggests once again that the bullish sentiment remains firmly in place, and always a good signal in a rising trend. Secondly, yesterday’s candle ended the trading session with a relatively deep lower wick, indicating that euro buyers are still predominant in the market and absorbing the selling on any reversal lower – again a positive signal. Indeed in this morning’s early trading the euros to pounds pair seems to have found support once again from the 9 day moving average. Given that all three moving averages are pointing sharply higher, and with the analysis outlined above, my trading suggestion for today is to look for buying opportunities on any further short term reversals as we look to punch higher in due course, with 0.95 as our initial target, but for a firm confirmation we need to see a break and hold above the dark cloud of Monday to be sure. If we can break above this region, and through the current congestion over the next 200 pip range then we should see a run towards the previous high of last year for the euros to pounds pair, particularly if the UK pound continues to trade with a bearish tone, and helped along by the BOE’s words and actions.

All the $undamental newsthe economic calendar for today is relatively minor and therefore unlikely to create big price moves as a result, with the main news in Europe being the German Unemployment Change which is forecast at 19k against a previous os -1k, and CPI Flash Estimates which are expected to come in at -0.2%, the same as last time. For the UK there is only on item, the Index Of Services, a low level piece of fundamental news which is unlikely to stress the markets.

You can keep up to date with all the latest fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links.  I have also included details on an excellent ECN broker.