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Nine day decline might get worst for the pound against dollar

Mon, Sep 8 2008, 12:00 GMT
by Benny Menashe

Finotec Group Inc.


Long signalShort signal
Buy a break of resistance level at 1.7975Sell a break of support level at 1.7745
GBP/USDBuy a break of resistance level at 1.8005Sell a break of support level at 1.7540
Buy a bounce at 1.7745Sell a failure of breaking the resistance 1.7975


Fundamental

The U.K. pound advanced before a government report that may show producer-price inflation held near the highest level in more than two decades, making it less likely the Bank of England will cut interest rates.
The pound snapped a nine-day decline against the dollar before a government report economists forecast will show prices charged by factories in August probably rose 10.2 percent in the year, the same as in July. Bank of England policy makers kept the main rate at 5 percent on Aug. 4 as they seek to balance the risk of a recession with the fastest inflation in more than a decade.


Technical

The Sterling may continue its downtrend versus U.S. dollar as we can see strong volatility in the market, based on technical indicators like RSI, which breaks 70% line downwards, MACD crosses the signal line and breaks the equilibrium level, and Bollinger gives us a bearish signal by closing the candle below the higher band.

GBP/USD (Daily Chart)

The primary tendency gives us a clear downtrend.

Daily Chart

GBP/USD (Four Hour Chart)

The pair couldn’t break standard error channel upper line.

Hour Chart

GBP/USD (Hourly Chart)

The Minor trend had a strong retracement.

Hourly Chart

Resistance
1.7975
1.8005

Support
1.7745
1.7540


Archive

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FINOTEC Trading’s Market Commentaries are provided for informational purposes only. The information contained within these reports is gathered from reputable news sources and not intended as investment advice. FINOTEC Trading assumes no responsibility or liability from gains or losses incurred by the information herein.


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