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Euro Dollar Chart – 2nd March 2009

Euro Dollar Weekly Candle Chart - 2nd March 2009

As it is the start of a new week I thought I would take a look at the weekly candle chart for the euro vs dollar, to see if this tells us anything new about the longer term outlook for the currency pair, and the short answer is no! As you can see from the chart I have added the main trend lines to the chart, which indicate a strong triangle pattern, with a firm base in the 1.2500 region, which is no great surprise, and simply reflects what we are seeing in the daily chart, as prices continue to consolidate in this region. In addition there are very few clues that provide anything in the way of a signal as to the direction of any breakout, and we therefore have to be patient. The main economic news this week is centred around interest rates in the UK and Europe, with suggestions that both will be cut again, and in the US we have Non Farm Payroll figures on Friday, all of which are now covered for you in detail on the economic calendar, with the TV channel providing the latest currency news.

Trading in the spot markets will continue to be difficult this week using simple buy and sell order, so my suggestion is to use currency options as part of your trading strategy in a straddle, or alternatively a less complex approach would be to use fixed odds trades, and a one touch or double touch trade. For retail traders my advice remains the same as for the last few weeks, and that is to stay out of this pair until further notice, and until we see a signal in the weekly charts indicating a breakout from this consolidation. A break below 1.2475 could see prices fall back to 1.2100 or lower, whilst we will need to see a break above 1.3330 for any move higher to be considered a serious reversal.

The short term and medium termĀ  outlook is sideways, the long term outlook is bearish.