Here is a very interesting post by Mr. Sean Hyman that you should all read! Visit his site for more insightful posting such as these:
The Bank of England just released its minutes earlier this morning. Now there’s some economists shifting gears. They think that the Bank could cut rates as soon as the April 9/10th meeting.
So the fundamentalists have a reason to short the pound against the buck now. How about the technicians/chartists out there? Yeah, they’ve got good reason to be short the pound as well.
There’s a charting pattern known as the “head and shoulders” pattern. It’s a very bearish pattern and usually means that you’ve put in a “top” for the moment. The left and right “humps” are the shoulders and of course the middle, higher hump, is the head.
Now when this pair breaks the uptrend line, their interest perks up. However, it’s only when it breaks through what they call the “neckline” (black line below) that they enter the trade. Once a candle closes below the black line, they’re on board.
Check out the chart below. Click the link below to view it.
The dollar gets really to assault the pound once again.
It’s a great thing when both fundamentalists and technicians both find a reason to take a trade.
I can see this pair targeting the 1.9600 level minimally over the upcoming days to weeks. This will be enough to break the short term uptrend line on the daily chart which, in turn, brings in the big money to short the pair as well.
So get ready for a “pounding”. It’s taking place right now even.