Many in the markets were looking for a surprise in last Friday’s employment situation report from the US in the end we all got one. The headline Non-farm payroll turned out at merely 120,000 a little short of the consensus forecast while the Unemployment Rate dropped to its lowest since 2009 at 8.6%. Listening to the commentaries we are getting explanations about upside revisions in the results from the previous months as a cause for the surprise drop in Unemployment yet we would point out that those revisions still amount to a fraction of the 600K-800K jobs needed to effect a purely jobs gains improvement of 0.4% in the unemployment rate leading us to conclude once more that people have given up on looking for work. Going forward all eyes are still in Europe with bad news coming out over the weekend as China’s Vice Foreign Minister Fu Ying indicated that China cannot use its $3.2 Trillion reserves to bailout the EU. Later in the day we have Merkel and Sarkozy again meeting for lunch ahead of Friday’s EU Economic Summit though we hold little hope that the German Chancellor is read to soften her position to Eurobonds and monetization. As such we expect quite trading for the day with the Euro and Cable looking vulnerable for the sell side.
In the end the confused reaction to US job numbers saw Friday with a big black candle, a rejection from the daily EMA lines. Among indicators we now have a bear cross in daily stochastic while macd is pointing up. From the lower time frames we are seeing a bearish bias among mixed signals as 4H stochastic come’s off oversold levels while macd is dropping. Hourly indicators has macd dropping while stochastic is at risk of crossing lower. We prefer shorting from just under 1.3421 the strong immediate resistance level though only near the open or at the open of European markets.
Much like Euro we have Cable getting rejected from its daily EMA lines Friday with indicators looking mixed as daily macd points up and stochastic is head lower. In intraday charts we are getting a bearish bias the 4H p has stochastic remaining oversold while macd is dropping, a previous bullish engulfing among the candles will have to be ignored given that it is from Wellington trade. Hourly indicators has macd flat beginning to bottom while stochastic has a new bear cross. From the candles we also see a failed attempt at an upside break the previous hourly a doji. We are looking to take the sell side, a close under 1.5585 may be seen as an entry. We prefer a rejection from the strong resistance at 1.5681.
In the end we saw not a quite an inverted hammer from the Aussy last Friday, a long wick with a small body for a succession of indecision candles. Among indicators we have daily stochastic just coming off overbought areas looking flat while macd is rising. In the 4H charts we have more range plays from the candles while macd is heading lower and stochastic poised to cross up. Hourly indicators are seeing more mixed signals with macd heading lower and stochastic pointing up. Despite the mixed intraday picture we do find ourselves above the daily EMA lines suggesting we can look for a buy on dips to the said lines for a further push up.
Friday turned out to be a pullback day for USDCAD as jobs numbers in Canada disappointed, the daily candles saw tail slightly larger than the body. From indicators we have daily stochastic pointing up while macd is heading lower note we have the EMA lines acting as our immediate resistances as well. In 4H charts we actually have stochastic in overbought levels with macd rising. Hourly indicators for their part is mixed with stochastic dropping and macd technically bullish staying above its signal. At this point we would like to find a good resistance level to short from ideally 1.0262 a previous break out point and just around the 21D EMA.
Kiwi spent Thursday and Friday in tightly ranging markets unable to clearly push past the 55D EMA. Daily indicators continue to see bullish signals with stochastic flat in overbought territory while macd is rising, the candles saw a succesion of indecision. In the lower time frames we are seeing indecision candles from the 4H level and hourly picture. In the former we have stochastic coming off oversold areas crossing higher while macd has crossed down. Hourly indicators for their part has stochastic heading up and macd flat below the signal. For now we prefer remaining sidelined we need a daily close above the 55D EMA to be convinced that a further rally is possible.
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