Forex Technical Update
- The EUR/USD did find resistance near the 1.4465 level, rejecting any 1H candle from closing above it over the Wednesday Asian and European sessions. (It was still Tuesday in the US when Wednesday the morning session started in Asia.)
- The current rally holds as it is creating higher lows and the market in the 1H chart is trading above the 200SMA.
- The RSI however is still below 60.
- This reflects a consolidation period.
- ADP Employment Data:
- The ADP employment data just came out as I am preparing this update, and came out to 91K in August , lower than the 102K forecast, and lower than July's 114K.
- The market has learned not to take this data too seriously as a harbinger for the NFP. Besides, the NFP is also expected to be 90K a lower reading than July's 117K.
- Still, the EUR/USD is sliding under 1.4450, and bearish in the near-term. (Usually risk aversion can push EUR/USD lower and disappointing jobs data can bring about risk aversion)
- If the market can push below a local pivot at 1.4415 level (really 1.4416-1.4418 but let's be sure), we have our first bearish continuation signal. Note this would also break below the 1H 200SMA.
- If the RSI in the 1H chart also falls below 40, we have momentum confirmation.
- In the short-term, this bearish scenario targets 1.4350, with acceleration likely below the 1.44 psych support.
- Close to 1.4330, we should see strong support, but if the market breaks below 1.4328 pivot, we open up a more aggressive bearish scenario, though we will have some important support levels near 1.4280 to break to confirm.
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Fan Yang CMT
Chief Technical Strategist