Euros To Pounds - Weekly Candle Chart 16th February 2009

Euros To Pounds - Weekly Candle Chart 16th February 2009

Mmm – well last week’s candle did at least provide a signal, but I’m not sure how much weight we should give this as a long term indicator for the $uros to poundsr, for two reasons. First, in the last four weeks we have one bearish engulfing signal of three weeks ago, followed two weeks later by our bullish engulfing candle of last week. So in the space of four weeks we have had two completely opposing signals. Of the two, the bearish signal was the stronger with a wide spread down bar engulfing a wide spread up bar. Last weeks signal was weaker as the body was only 100 pips, and with a wick top and bottom was hardly a strong signal, with Friday’s close only just crossing the 14 day moving average. However, both last week and the week before touched the same lows, indicating some resistance at 0.8650. My suggestion therefore, although I have to advise caution here, is to look for long positions this week, but probably closing out before Friday as I still believe that in the longer term the euro is overbought and therefore the pair are set to fall. This would be in line with the stronger bearish engulfing signal of three weeks ago.

As I am sure you know, today is a holiday in the US with all the markets trading on very thin volumes, so I suggest you wait until tomorrow before looking for an opening in the daily chart. I have outlined all the $undamental news this week on the euro dollar weekly update  for the euro, and on the weekly pounds to dollars chart for the UK pound.