Euro dollar daily candle chart - EUR/USD 5th June 2009

Euro dollar daily candle chart - EUR/USD 5th June 2009

Yesterday’s candle on the euro vs dollar daily chart has provided us with several interesting points to consider in our technical analysis for today, as we wait for the Non Farm Payroll numbers to be released later this afternoon in the US. The first point to note is that the candle failed to confirm the bearish signal of Wednesday which provided a two bar reversal with a tweezer top, and we can therefore assume that this was a false signal, and can therefore be ignored. Secondly, the low of the day bounced neatly off the 9 day moving average, suggesting that the bullish tone of the rally will continue in due course. As I have mentioned in previous posts, the moving averages ( both 9 day and 14 day ) often provide subtle clues when a market pauses and reverses, and when we see support from the average, as seen yesterday, then this is often a sign that the trend will continue in due course, and indeed we can see this at several points in the rally over the last few weeks, with the low of a reversal touching either the 9 day or the 14 day before continuing in the original direction of the trend. This concept applies equally well, whether the trend is up or down, although of course in a down trend the moving averages would be above the price rather then below! So in summary, yesterday’s candle failed to provide any confirmation of the bearish candle of Wednesday, and coupled with the support from the 9 day moving average we can assume that the upwards trend for the euro vs dollar will continue in due course, supported by all three moving averages.

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