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GBPUSD at resistance, 1st March 2011

Forex Commentary:

The U.S. dollar recovered from a 3-1/2-month low against a basket of other major currencies on Tuesday as the euro again failed to breach resistance at its 2011 high.

The dollar index .DXY, which tracks the greenback’s performance against a basket of major currencies, fell to 76.735, its weakest level since early November, before recovering to 77.053, up 0.2 percent from the prior close.

The U.S. dollar rose 0.2 percent to 81.94 yen, traders cited early heavy buying of dollar/yen by Japanese exporters. The greenback gained 0.1 percent to 0.9297 against the Swiss franc.

Sterling initially rallied to a 13-month high of $1.6330 against the dollar after stronger-than-expected UK housing data stoked expectations the Bank of England will raise interest rates before the Fed. Those gains eased in New York trading on general dollar strength.

Trading Setups / Chart in Focus:

GBPUSD

The GBPUSD broke above resistance near 1.6275 – 1.6300 today, however the pair sold off into the New York close and ended the day below this resistance, closing at 1.6263.

Should price break below the low of this pin bar setup we may see a push lower into the dynamic support between the 8 and 21 day EMA, traders should watch this support area for potential bullish price action setups to re-join the overall uptrend.

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For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my price action trading training website.

Other Markets:

On Wall Street today investors sold stocks on concerns that rising oil prices could hurt the economic recovery.

Brent crude rose above $116 a barrel as supply disruptions persist and political violence spreads in the Middle East and North Africa. Higher oil translates into increased energy and gasoline costs for consumers.

The Dow lost 169.38 points, or 1.39 percent, the S&P 500 fell 21.04 points, or 1.59 percent, and the Nasdaq lost 44.86 points, or 1.61 percent.

Upcoming important economic announcements: 3/2/2011

4:30am EST: Britain – Construction PMI
8:15am EST: United States – ADP Non-Farm Employment Change
10:00am EST: United States – Fed Chairman Bernanke Testifies
7:30pm EST: Australia – Building Approvals m/m
7:30pm EST: Australia – Trade Balance
8:00pm EST: United States – Fed Chairman Bernanke Speaks