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UK pound continues in bullish tone

The UK pound continued it’s bullish momentum last week, ending with a wide spread up candle on the weekly chart and breaking and holding above all three short term moving averages once again, and ending the forex trading session at 1.5863. This bullish momentum has continued in early trading this morning, with Cable continuing higher to trade at 1.5895 at the time of writing. The daily chart reflects the positive tone with both the 9 and 14 day moving averages having crossed the 40 day moving average to give us a strong bull cross signal, and the key for continued upwards momentum will be a break and hold above the psychological 1.6000 price level where a band of potential price resistance now awaits. Indeed this area could provide a substantial barrier to further progress, particularly as the dollar index chart is now signalling a potential reversal higher for the dollar, which would see Cable move lower as a result. However, with the US markets closed today in observance of Martin Luther King day, we may need to wait until tomorrow, before we see any sustained moves for Cable.

Elsewhere, the pound is strengthening against the euro which has sold off early in the London trading session, with the long legged doji candle of Friday, giving a clear signal of short term bearish sentiment for the pair, which has been validated so far this morning, and any move lower today could see a test of support in the 0.8300 region, with a breach here opening the way to a test of the 0.8200 platform in due course.

The recent bullish trend on the GBP/CHF continued once again last week, breaking above all three short term moving averages, following the strong bullish engulfing signal of early January which gave an excellent trading entry point on the daily chart, and provided we see the 9 day moving average cross the 40 day moving average, which is now imminent, then this would provide a further degree of confirmation for the move. This morning’s price action has cleared resistance in the 1.5300 area which should also provide a further level of support to the move higher for the pair in due course.