5:14a GMT - Lots of action on Friday! I took a small loss on my long which got about 15 pips in the profit before turning south and hitting my tightened stop. The markets themselves became extremely volatile - dropping over 200 pips in just a few hours - as the US jobless rate slowed much, much more than expected losing only ~10k jobs instead of the expected ~120k. Hours worked actually increased month-over-month, which is an early indicator for production output. These numbers spurred a fear in the markets that the USD would raise interest rates much earlier than anticipated thereby making the EURUSD carry trade less appealing.
Coming into the start of Monday morning it is clear the market is still divided on how to react to the news, with half the analysts declaring the uptrend broken (the bottom resistance was pierced depending on where you plotted it) and a steady diet of traders licking their chops at the opportunity to buy so close to the channel bottom. Both arguments have merit. Technically we are still in a strong uptrend however the pair is making a bearish flagpole consolidation pattern on the 4-hour charts at the moment.
Daily Outlook: With signals completely mixed and volatility peaking I will stand aside today. No trade is particularly appealing in either direction at the moment and definitely not worth of my hard-earned equity :). Bernanke does speak today but I expect little of value from him unless he offers specific timeframes USD interest rate increases - information he is very unlikely to divulge.
Trading Idea: The main strategy for the EURUSD today is to stand aside and let the markets give us a more appealing trade signal. That aside there will be good selling opps at fibonacci retracements of Friday's fall a 38.2% (~1.4945), 50% (1.4980) and 61.8% (1.5020). There will also be good potential buying signals on another dip to 1.4825.