Markets’ initial response to the strong US payrolls number Friday proved to be transitory with the positive open in equities quickly reversing into losses with US indices closing out mixed with DJIA and S&P 500 seeing modest losses and the NASDAQ slightly in the green. Currency markets were even quicker to kill the risk appetite story as the jump into Aussy and the Loonie by algo types took all of only two minutes before getting reversed. Once again December payroll numbers has proved deceptive with more seasoned money opting this one out despite the impressive 200,000 read and another cut in the Unemployment rate to 8.5%. Simply put seasonality means that there was a lot of low paying jobs as retailers geared up for the holidays while those who still had money and were out of work quite likely decided to take a break from the job hunt for the holidays. That said though this is the second time that good jobs numbers was also generally equated into a good for the dollar move, it opens the possibility that we are returning into text book interpretation of economic data as the monetaru policy differences between the US and Europe the two largest bond markets are now seen inline. For the day we already have some bad numbers as New Zealands trade balance came at a deficit of 308 million while from Australia November Retail Sales came out flat against expectations of a 0.4% gain. Technically speaking we remain vulnerable for further risk aversion plays though we continue to prefer Euro dumping over the rest.
It appears that USDCAD is playing our daily symmetric triangle with Fridays’ push past the daily EMA lines, now at 1.0236, signalling a follow through to Wednesday’s bounce off the triangle support line. We now have daily stochastic in overbought levels while macd’s are heading up. In the lower time frames we continue to look bullish as 4H indicators give a confluence of buys stochastic overbought and macd rising. Hourly indicators are also bullish with stochastic crawling in overbought territory and macd heading up. With the intraday indicators aligned with a bullish set of signals from the daily charts we prefer a cautious approach to going long. Consider a buy on dips and allow the hourly indicators to signal that a correction has been seen.
Friday saw AUDJPY closing around the daily EMA lines and with the downside gap at the open we find ourselves past the said lines making 78.52(62) a strong resistance area. Indicators currently has daily macd’s crossing lower while stochastic has pushed to oversold territory. Intraday we are seeing a build up of bearish signals with 4H EMA lines generating dead crosses as stochastic push to oversold levels and macd’s drop. In the hourly charts we have stochastic coming looking to come-off the oversold levels while macd is still bearish. For now try and see if hourly stochastic oscillates around 20 which would suggest a bear trend in progress. We prefer taking the sell-side from just under 78.52(62) though a close below 78.16 may also be seen as an entry.
Earlier releases saw Australian Retail Sales coming out flat a disappointment following good numbers out of China over the weekend. At the moment we find ourselves just above the strong support area daily EMA lines, 1.0143(53) courtesy of the knee-jerk sell-off. Among indicators we see stochastic oversold while macd is also poised to cross lower. In intraday charts we see sell signals from both hourly and 4H levels with stochastic oversold at both time frames and macd dropping. For now we prefer remaining sideline. Given the strength of our initial support level we would like to look for a possible base building off the 1.0143(53) region though any close beneath the said prices paves the way for the next down leg.
Friday saw a follow through to our rejection from the daily EMA lines though thus far we have failed to see a new low in our wide range play. Note daily charts appears to have been in a wide shipsaw trade since late November with the lows getting lower along with the highs though there is no clear bear channel. Daily indicators has a confluence of bears with stochastic oversold as macd drops. In the 4H level we remain bearish as macd drops and stochastic heads down. Hourly indicators for their part may be poised at a bullish crossover. Candlesticks for both time frames are mixed. Overall we prefer the sell side of the market coming from just under 1.5435 or on an hourly close below 1.5402.
Following Friday’s big sell-off we see a downside gap at the open for the Euro with prices testing our 161.8 Fib expansion point from before. From indicators we currently have a confluence of bears with stochastic oversold and macd’s dropping. In the lower time frames we have a confluence of bears in 4H charts with stochastic reentering oversold territory. Hourly indicators for their part looks bearish with macd down though stochastic appears poised to hook higher unable to push to oversold levels. Given the Japanese holidays and the lack of follow through past the 161.8 Fib expansion level we prefer remaining neutral with new shorts to be taken only from just under 1.2728 or on a break of the 1.2666 swing lows, and Fib expansion point.
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