Hi, I explained last week that it’s always a difficult time knowing whether price is faking out or we’re getting a change in direction. I felt that the NFP result could perhaps define the future direction of the dollar. However, on Friday there was an amazing result. The markets were expecting 7.75 million more unemployed, and suddenly they turned out and said it was two and a half million positive.
Now, had that data come out of China nobody would have believed it! Like most commentators I was shocked at the time, the stock markets jumped and then the Bureau of labor statistics who publish the figures admitted the official unemployment rate may be low due to an error in data collection! It is to do with how they calculate the data. In the UK it’s the same thing as well. People who are being furloughed, ie, they are not working and they are receiving money from the government are not being counted in the unemployment figures.
The US Bureau of Labor feel that the real unemployment rate is likely to be at least 16%. And I’ve seen some figures somewhere suggesting 20%. So we have the same issue again, then for the week ahead, was that a fake out or is this a reversal?
This is a copy of the analysis I provide for members of our forexmentorship program every Sunday before the markets open. In this analysis I am looking at the big picture and main areas where I expect price to react.
We then use this information in a number of ways. To place forward orders where possible and even to use it to help daytraders who use our 30 minute, M3 entry system.
I think that the Fed on Wednesday will give us some clear guidance as to what is going on.
It’s a fairly light scheduled week for news this week.
There is a bank holiday in Australia on Monday, ECB president Legarde is speaking on Monday as well before the European parliament.
So maybe some fireworks there, and of course on Thursday, the ECB came out with some surprising news last week, as well, which saw the Euro shoot higher.
Other than that its a fairly light scheduled news, but obviously the problems going on in the USA and Trump notwithstanding. There could always be something that suddenly comes out that surprises us all.
On Friday, the stock market shot up in the USA. The S&P is almost back to where it started before COVID, the NASDAQ is even higher. The Japanese markets are higher. Everything’s gone up. I still don’t understand it, but there we go. Let’s focus on the currencies
Euro./$: What did it do? It stopped to the pip at the weekly 200 EMA, which is why I pay so much attention to these big EMS. And you’ll notice that it bounced up from the 55, my other favorite EMA.
The Chf was teasing us all week, last week. And it lost the flipping correlation.
I showed you last week, how correlation had seemed to have returned. This was keeping me out of shorting the Chf or long in the Euro because the correlation was not there. The Gbp/$ stopped at the 55EMA on the weekly as well. So the big EMA’s are very important to me,
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Euro/$ If it comes back down to one 1.1100. I would be looking too long. If it gets up to one 1.500 area I will be thinking of a short. Intraday I will watch for a possible short from the weekly 200EMA at 1.1380.
Chf: If it gets back up to 0.9800, I will short if it breaks below 0.9550 around last week’s low on the daily candle close, bear in mind that fed meeting during the week.
Euro/Gbp: Same as last week, It shot up again to 0.9000 last week which is HUGE previous resistance. I will be interested to short it there on a 30 minute & once more or long from 0.8750 a forward order. Intraday 0.8840 is the area to watch. If it breaks and closes above 0.9000 I will wait for it to do so on a weekly chart before longing there. See the video and look at a weekly chart to see how many times it faked out here in the past.
Gbp/$: It broke higher and stopped to the pip at the weekly 55ema. If it breaks and closes above there on a daily then I will look for an M2 breakout, pullback long. Intraday I will watch the M3 for a possible short from there. If it drops then 1.2500 is an area of interest but not a forward order. I would be more interested in an A grade long at 1.2400 as it has more strength for a stop.
$/Yen: Messy, to many EMA’s below and 110.00 above. I will wait for the Fed reaction.
Cad: Kept dropping. Its now done 560 pips of the potential 1000 pip triangle break I showed you weeks ago! 1.3850 was my preferred area for a pullback last week but it just kept dropping. If it shoots up for any reason I will short there again. If it keeps dropping I will long at 1.3010.
Nzd: I said last week that “swing traders will look to short at 0.6490″ it did it almost to the pip BUT on Friday after NFP which we never trade. If it drops then watch the weekly 55EMA & Daily 200 for clues to long from there between 0.6300/6360. If it breaks and closes above 0.6500 on a daily candle close we start to look for a long with a target of 0.6700.
Aud: Broke higher, stopped at the HUGE area of previous support and resistance of 0.7000. I said last week that the COVID crisis has not been anywhere as bad as most of the rest of the world and they are coming out of it quicker and a lot less cost, so it could be on for a move higher. As with the NZD. I would need a break and close above 0.7000 on a daily to think about a long. I prefer a pullback and 0.6700 looks a good area to do so. Be careful on Monday as its a bank holiday so could be slow,
See recent blog posts as to how i do this: I do my analysis on daily and weekly charts first and make a note of the MAJOR areas of support and resistance. Then copy them on to Pierre’s Earth and sky template. Then I make a note of the weekly & monthly pivots points and add them to the charts. You will see lots of opportunities line up during the week. The important thing then is to select a bias for the next few days and do NOT take trades if price is too near a trend line or pivot. Ideally, you want to buy when price is near a major support and or pivot point line and has the potential to make at least 40 pips. Vice versa for a short.
New members, please note: If I am looking to take a trade long, for example, 1.5000, I place my order 10 pips above & 10 pips below for a short. This is because price often does not quite reach a major line and you need to allow for spreads.
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