Aug2 – Market Analysis (NFP day)

General comments

  • Yesterday was the first time in a while that I did not complete a market analysis (if I exclude the days on which I was sick a few weeks ago).  However I did spend the WHOLE day (from 10am to 9pm) backtesting a STAM-related strategy – which was rather interesting.  I figured that I was not going to put on any trades in any case prior to the central bank decisions and NFP.
  • Realisation – I am definitely becoming much more patient with my trading.  I can refrain from putting on trades when the market is volatile and clearly moving.  I am just waiting for my setups. Well done “Trader George” !!
  • Equity markets rallied a little yesterday – on the basis of the central bank announcements and some good economic numbers?  Gold fell back a little to below $1,300 again.  The Nasdaq made a new all-time high.
  • Question for my coach – with NFP coming up – should I mainly be concerned on staying out of USD pairs, or should I not trade any pairs?  I expect that the answer is not to trade any pairs.


FX Analysis

  • Momentum on Euro looks to be changing to bullish against USD, JPY and CHF – unless this is drastically reversed by NFP later, momentum will be bullish on all EUR pairs by the end of today/this week.
  • Currently EUR and CHF are still leading the way in terms of strength, with GBP, JPY and AUD being the weaker pairs.

Today there are three pairs with S1 setups that match strength with weakness, these are as follows:

  • GBPCHF – Price is currently retracing, so this could be a pair to trade following NFP.  Note also that the pair is starting to approach the upper boundary of the channel on the W and D timeframe.  Although it may be tricky to spot bearish price action – I can see some natural target and stop areas.
  • CHFJPY – No retracement going on here, on the D chart. 
  • EURGBP – Presently price is retracing a little bit – as expected very volatile candles for yesterday on the D chart, since both BOE and ECB had announcements.  Cannot see any logical target or stop areas. Highly unlikely that I would end up with a trade here.

Additionally there are two pairs that match strength against weakness, and that are likely to be in S1 setups by the end of the day, these are:

  • EURAUD and AUDCHF – in both cases, the Aussie dollar has tumbled significantly these past few days – a large move has occurred for both – thus we first need to wait for a pullback before we can consider entering a trade on these pairs.  Remember the real movement starting to happen overnight from Monday to Tuesday on negative AUD economic figures.

Action for today:  Have a look at the market action around the time of NFP – again, get an idea of how the wide the spreads are.  Then after 60-90 minutes consider entering orders into the market on the basis of the STAM strategy.


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One Response to Aug2 – Market Analysis (NFP day)

  1. Wanted to add one point here – I did look at GBPCHF again about 1-2 hours after NFP. And I ended up entering an order to sell @ 1.4142, target 1.4015, stop 1.4232 (risk 80, target 127), because if price would continue in the way that it was falling following NFP, there would be a nice bearish pin bar (with a long up-wick) on the daily chart – the channel that I have drawn onto the D and W chart – if that would continue to hold, then I the trade should would have resistance to the upside. And it would be selling weakness (GBP) and buying strength (CHF), and there was a retracement over the past two days, thanks to the BOE decisions. As it turned out my order was never triggered. I removed it around 8pm to ensure that it would not be in the market when it re-opened on Sunday night.


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