By Jay Norris
Tomorrowâ€™s U.S. non-farm payroll number, and the Fedâ€™s interest decision and wording early next week may be the last significant scheduled chaos for financial markets prior to the holiday slowdown.
In currency markets these last couple of sessions the price action that really pops out for me is the sell-off and subsequent doji candle right on a 20-month bull-trend line in the Poundâ€“ see chart below. GBP most recently has been the poster child for all the trader talk of a Dollar correction. Hard not to listen to such talk of a need for a greenback rally given the economic and competitive damage the Dollar has caused to so many exporters the world over. We might think that this would be of some concern to the powers that be in Europe right now, and in Australia in the near future, not to mention a technically stretched chart, but these trend things seem to extend beyond most reasonable analysts' expectations.
Chart courtesy of eSignal
Regardless of all the talk of what is, and what should be, the long-term trend for most currencies is solidly up, while sentiment on behalf of many traders is tilting down. No doubt the immediate (or short-term) trend on many currencies has shifted lower, and the Pound chart above is a perfect example of this situation. In the big picture however, this short-term price action is still counter-trend, and counter-trend to me means you have to be quick and careful, and you have to be very leery of carrying positions through scheduled economic releases, hmmm, say non-farm payroll or FOMC decisions.
That being said, Iâ€™d have to recommend laying low through next Tuesdayâ€™s close when Mother Market will have had a lot more information already digested.
John Jay Norris
Senior Market Strategist
Brewer Futures Group, LLC
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Chicago, IL 60604
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