Once again an NFP day has turned out to be another ‘much ado about nothing ‘ as the weaker than expected numbers failed to register for the currency markets with revisions made in previous releases to offset any disappointment with the headline data while the Unemployment Rate even improved to 9.0% against expectations of a steady 9.1%. Overall the numbers as they were was an improvement headline Non-Farm Employment Change numbers came out at 80K against markets consensus of 97K but the prior numbers were revised up to 158K from 103K. More importantly the number of long term unemployed has begun to drop in another hint of a turn-around though we are of course still far from pre-crisis jobs levels. This is just the beginning. For the currency markets in the end correlation traders had had the better of the textbook as the knee-jerk strengthening of the dollar did not last long. What interests us the most Friday was weakness in the Canadian jobs data with the Unemployment Rate ticking up to 7.3% while the Employment Change data came out at -54K against a 16.3K median forecast. This suggests the BoC was right in its shift in its policy stance and as such should see USDCAD staying above parity for a while.
As with the rest of the major’s an upside gap at the open failed to see a follow through with strong immediate resistances from the daily EMA lines and the 38.2 Fib of the previous week’s sell-off at 0.7972(76). Daily indicators are looking mixed with macd dropping and stochastic coming off oversold levels. From the 4H picture we have a bearish divergence with stochastic poised at another bearish cross while macd is above the signal line and rising slowly. Hourly indication for their part see a confluence of bears with stochastic and macd. Given the strength of our resistances we prefer looking for shorts from just under 0.7972(76) with tight stops at 0.7985.
Friday turned out to be a disappointment with a spinning top and modest ranges, at the close we find ourselves still above the daily EMA lines while also still under the 200D SMA. From indicators we are seeing mixed signals as stochastic points up while macd is heading lower. In intraday charts we seem to be in the process of generating a bearish breakout with hourly macd and stochastic heading lower as prices crowd the 1.0364 support area. From the 4H picture we have macd flat technically above the signal line while stochastic is poised to crossed down. For now look for a close under 1.0364 to signal a bear market though given the lack of catalyst expect limited objectives, perhaps 1.0315.
Friday saw USDCAD bouncing off the daily EMA lines for a bullish engulfing at the close. At this point we have stochastic pushing for overbought levels while macd is also heading up. From the lower time frames we see mixed signals out of the 4H macd and stochastic while in hourly charts we see a confluence of buys with macd opening up and stochastic heading for overbought areas. For now we are looking for a close above 1.0216 to signal a follow through for the current bounce or consider a buy on dips to the 1.0156 region.
At the close Friday we saw a high wave doji for Cable remaining between the 200D SMA and the daily EMA lines. From indicators we have stochastic heading higher while daily macd is flat looking to open down. From the 4H level we have macd’s heading up though stochastic is mixed. Hourly indicators for their part has a confluence of bears with macd crossing lower and stochastic pointing down. For now we find prices just above the hourly moving averages with indicators suggesting a bearish bias. Look for a close below the psychological 1.6000 area and we have an excuse for a bear market, minimal objective though to 1.5945.
In the end after all the roller coaster ride we find EURUSD closing with a black spinning top with prices remaining under the daily EMA lines. Daily indicators show stochastic up while macd is dropping to suggest an inability to see a real push through the daily EMA’s. At the open we tried to see an upside gap though quickly failed to generate a follow through, 4H indicators has a confluence of buys yet candles suggests a bear market. From the hourly level we have stochastic just crossing lower while hourly macd is flat though under the signal line. Given the mixed signals and the EMA lines providing an immediate top we prefer looking for shorts from under 1.3826 though a close below 1.3758 may also be seen as a bearish entry.
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