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By HaleStewart March 24, 2014 8:43 am
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Pound/Dollar Chart Breaks Short-Term Support

The chart above is a 6 month pound/dollar chart.  Prices have broken the short-term trend line connecting the early November and early February lows.  The shorter EMAs (10 and 20 day) are both moving lower with the 10 day crossing below the 20.  The 50 day EMA is now moving sideways and the MACD has given us a sell signal.

There are several reasons for this move.  The first is a natural sell-off occurring after a rally.  But the second is geo-political; the situation in the Ukraine has created a standard safety bid in the market, leading traders to move into the dollar. 

The next logical price target is the 1.63 level, which was established in early February.

Hale Stewart is a former bond broker who has been writing about economics and financial markets since 2006 on the Bonddad Blog.  He is also a tax attorney with a domestic and international practice while also forming and managing captive insurance companies for US companies.   You can follow him on twitter at:@captivelawyer

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