FX, SPX & Gold: Was NFP enough to shift the US$ paradigm?

Last week: Friday’s NFP result was much weaker than expected and this news sent the US$ tumbling from the key resistance level it had recently stalled at. This US$ shift triggered movement with a number of currency pairs and commodities and I have posted charts of some of these in this update for consideration. The big question now is, as I see it at least, has this NFP result been enough of a miss to undermine the recent US$ rally?

This week:

  • US$: The US$ has weakened and closed below 95.50 and looks to be headed for 92.50 support. This will be the threshold level to watch in coming sessions to see if this post-NFP bearish sentiment continues. A more detailed review of the FX indices can be found through this link.
  • Data: There are two Central Banks to report interest rates this week: the RBA and RBNZ and these two items, along with some CNY data, might provide some decent stimulus for FX movement during the Asian sessions.
  • AUD$: watch the 0.74 level with the RBA rate decision and CNY data.
  • NZD$: watch the 0.70 level with the RBNZ rate decision and CNY data.
  • TC Signals: There were two new TC signals at the end of last week and both triggered after Friday’s NFP-inspired US$ weakness.
  • S&P500: I am closely watching this major market index to gauge broader market sentiment and note that it closed only just below the key 2,100 level despite the much weaker than expected NFP result. The 2,100 and Flag trend line remain as key levels to watch for any make or break activity.

Trading Calendar: watch for impact from the following items:

  • Sun 5th: CAD BoC Gov Poloz speaks.
  • Mon 6th:  NZD Bank Holiday. USD Fed Chair Yellen speaks.
  • Tue 7th: AUD Interest Rates.
  • Wed 8th: CNY Trade Balance. GBP Manufacturing Production. USD Crude Oil Inventories.
  • Thur 9th: RBNZ Interest Rate decision, RBNZ Press Conference and a RBNZ Gov Wheeler speech. (Second Tier: CNY CPI and PPI). EUR ECB President Draghi speaks. USD Weekly Unemployment Claims. CAD BoC Gov Poloz speaks.
  • Fri 10th: CNY Bank Holiday. CAD Employment data. USD UoM Consumer Sentiment.

S&P500: I’m watching the weekly chart of this index to gauge sentiment for broader market risk appetite. This is a huge market index and it is currently struggling at major resistance at 2,100 as this is a psychological level and the junction of a Flag trend line. The index closed with an indecision-style Doji candle for the week, albeit bearish coloured, but I’m watching for any bullish breakout or bearish retreat from this 2,100 region to help assess the broader market appetite for risk in the wake of Friday’s weaker than expected US jobs report.

S&P500 weekly: this has the look of a Bull Flag so watch for any breakout or respect of the upper Flag trend line near the 2,100 level:

S&Pweekly

S&P500 daily: this chart shows how the Flag trend line and 2,100 S/R level are very closely aligned at the moment. Price dipped on Friday following the dreadful NFP print but recovered much of this by the close. The next couple of weeks should provide interesting viewing to see whether the index is either rejected at this major resistance level or can manage to push up through the 2,100 and previous HIGH near 2,135:

S&Pdaily

S&P500 daily expanded: there is a relatively narrow range that price seems to get trapped within when it ventures there and this is between the 2,135 and 2,070 levels. Thus, watch this range for any breakout or retreat:

S&Pdaily

Gold: Gold rallied around $35 as a result of the US$ weakness following NFP and the weekly candle closed as bullish coloured but, also, as an indecision-style ‘Inside’ candle. Gold had rallied around $250 since late last year and the recent pullback to $1,200, whilst only a 38.2% fib pullback, may be all we see for now especially if the US$ remains weak. The 61.8% fib of this $250 swing high move is back near the key $1,150/45 region and I had thought we might get a pullback to test this key level but that hasn’t been the case as yet.

The condensed 4hr chart below shows how Gold has essentially been bouncing around in a wide $100 range between $1,200 and $1,300 for the last four months and so waiting for a decisive breakout from this region, either up or down, might not be a bad trading idea.

I almost have a new 4hr chart TC signal to LONG Gold BUT the huge move and close well outside the Bollinger band makes me cautious as some pullback would not surprise. The 61.8% fib of the recent 4hr chart swing low move is up near $1,265 and so a push up to at least this level could be expected, either before or after any pullback move, but this would be a move worth $20.

  • I’m watching for any new TC signal, the top of the daily Cloud, the $1,265 level and, after that, the $1,200 and/or $1,300 level for any bearish or bullish breakout.

Gold4hr

Gold4hr

GoldDaily GoldWeekly GoldMonthly

Gold and the Ichimoku Cloud: Gold has closed above the 4hr Cloud and is close to closing above the daily Cloud. Any new close and hold above the daily Cloud could help to support the metal.

Gold4hrCloud GoldDailyCloud

Forex:

EUR/USD: the 4hr chart shows the rally with price action following Friday’s NFP-inspired US$ weakness and how a new TC LONG signal was triggered. This rally came following a bounce off trend line support that has been in play since last November. Note how the recent 4hr candles are well outside the Bollinger bands though and this makes me cautious with the new TC signal. 

The weekly chart shows that 1.15 is the next resistance level to watch and any break and hold above this might support a move up to the 1.18 and then 1.22 region.

Price action has now closed above the 4hr and daily Ichimoku Cloud though and so this supports the new TC LONG signal.

I am aware that many are bearish this pair but I’m keeping an open mind. I’ve just spent four and a half weeks traveling through France, Portugal, Spain and the UK and was greatly surprised to see the whole area thriving with extensive construction activity, buoyant tourism and real estate and cheerful and optimistic locals. I do wonder if all the money that has been invested through various bouts of QE is starting to pay dividends. I’m keeping an open mind about the next direction for this and all pairs!

Watch for impact from Thursday’s ECB President Draghi speech.

  • There is a new TC LONG signal on this pair.

EUmonthly

EUweekly EUdaily

EU4

EUR/JPY: this is a tough one to ponder as US$ weakness generally pulls the U/J lower and, as result, pulls this pair down too but there is also some EUR$ strength at play and countering this weakness. For the time being though the E/J is following the U/J’s lead lower but caution is needed as wedge trend line support is nearby. These types of wedge patterns are considered to support bearish reversal and so watch for any support from this lower trend line. One trading idea would be to watch for any make or break at this trend line with a STOP on just the other side of the trend line to possibly target these areas:

  • a bearish breakdown below the wedge trend line would bring the weekly chart’s 61.8% fib near 115 into focus.
  • a bullish bounce up off the wedge trend line would bring the 126 level back into focus.

The E/J is below the 4hr, daily and weekly Cloud but still in the monthly Cloud. Remember this chart? Watch for any support from the bottom of the monthly Cloud as well.

EJmonthlyCloud

  • I’m watching for any new TC signal PLUS the weekly/monthly chart’s wedge trend lines.

EJmonthly EJweekly EJdaily EJ4

AUD/USD: NFP-inspired US$ weakness trigger a rally and new TC LONG signal with this pair on Friday too. There is the RBA interest rate announcement and CNY Trade Balance data to impact early next week though so caution is needed. It is not anticipated that the RBA will cut rates but a knee jerk reaction, to whatever the rate news is, could evolve.

Price is back above the 4hr Cloud but still below the daily Cloud and so the TC signal is not an ideal one.

Price is just under the key 0.74 S/R level though and I’d almost prefer to watch for any make or break around this level given the wait for the RBA and CNY data. Check out the monthly chart below and you will see how important the 0.74 level has been for this pair (click on this chart to enlarge so that you can see the 0.74 level more clearly).

  • There is a new TC signal to LONG here BUT I’d almost prefer to see how price reacts IF it gets back to 0.74.

AUmonthly

AUweekly AUdaily AU4

AUD/JPY: see my Friday write up on this pair as this still holds.

GBP/USD: there are two and a half weeks to go until the Brexit vote and I suspect GBP/USD price action will remain choppy until after the June 23rd poll result is out. There is fair bit of Brexit news with plenty of fear-mongering about a LEAVE result and so this may be a pair best left until the situation is resolved. I’m still seeing a bullish-reversal descending wedge and these trend lines may be of some use come June 24th.

GUmonthly GUweekly GUdaily GU4

NZD/USD: This pair rallied with Friday’s US$ weakness as well but without any new TC signal. However, this pair might be one to play in a similar way to the AUD/USD. With the Aussie, although there is a new TC LONG signal, I’m going to watch for any reaction around the 0.74 level. With the Kiwi, though, watching for reaction around the key 0.70 level may be worthwhile although a word of warning is needed here as there is a wedge trend line just above this 0.70 level. Check out the monthly chart below and you will see how significant this 0.70 level is for the NZD/USD. Thus, watching for any make or break at this 0.70 and the wedge trend line might be a better way to approach trading this pair.

Price action is above the 4hr and daily Cloud and close to emerging from the weekly Cloud. It is worth noting that the top of the weekly Cloud is quite near this key 0.70 level for some added confluence, thus, watch for any bullish breakout from the weekly Cloud to support a continuation move with this pair. There will be many lining up to SHORT at this 0.70 level but I’m keeping an open mind.

KiwiWeeklyCloudThere is CNY Trade Balance data to impact here on Wednesday and on Thursday there is the RBNZ interest rate decision, Press Conference plus another RBNZ Gov Wheeler speech. It seems that a rate cut is expected so watch for reaction to the headline news and text of the statement.

  • I’m watching for any new TC signal BUT prefer to watch for any make or break at the 0.70 and wedge trend line level following the RBNZ rate news.

KiwiMonthly KiwiWeekly KiwiDaily Kiwi4

USD/JPY: the last time I posted about this pair I was watching for a breakout from the daily chart’s triangle pattern and this was how the chart appeared in that post:

UJdaily

This triangle breakout eventually triggered and the bearish move gave over 330 pips but, the big question is, where to now for the USD/JPY? Price action is back down near a recent low at 105.50 and this is the region I suggest to watch for any make or break activity:

  • a bearish break and hold below 105.50 would bring the 100/101.50 region back into focus. This would fulfill the bullish ‘Inverse H&S’ move I have been stalking for some time!
  • A bounce up from the 105.50 level would have me watching for a move back to test the 111 S/R region.

Price is below the 4hr, daily and weekly Cloud which is bearish.

  • I’m watching for any new TC signal and the 105.50 S/R level.

UJmonthly UJweekly UJdaily UJ4

USD/CAD: In a similar way with the USD/JPY the last time I posted a chart on the USD/CAD it was also within a triangle. This was how the chart appeared in that post:

Loonie4hr

The triangle breakdown here gave over 150 pips and price is now back below the key 1.30 level. The May candle closed above 1.30 but this move back below 1.30 is rather bearish. Check out the monthly chart below and you can see how significant the 1.30 level has been for this pair.

Price action is below the 4hr Cloud but in both the daily and weekly Clouds so further choppiness around this 1.30 level could be expected.

  • I’m watching for any new TC signal but also the 1.30 level for any test to SHORT.

LoonieMonthly LoonieWeekly LoonieDaily

Loonie4hr

EUR/NZD: this pair continues consolidating within a triangle after an earlier bullish wedge breakout. Price recently bounced up off the bottom trend line of this triangle but it remains below the key 1.675 S/R level. Watch to see how this pair reacts to the RBNZ rate decision and ECB President Draghi speech.

Price action is below the 4hr and daily Cloud which is bearish but it is holding up near the bottom of the weekly Cloud so watch for any continued support from this latter region.

  • I’m watching for any new TC signal on this pair and the 1.675 level.

ENmonthly ENweekly ENdaily EN4hr

GBP/AUD: the seven-week rally came to an end for this pair last week after giving 1,800 pips from the earlier wedge breakout but price failed to reclaim the key 2.07 S/R level.

A daily support trend line has now been broken and I’ll be watching fib levels on the 4hr chart as a guide for targets IF there is any further bearish movement. The Brexit situation remains an ongoing issue for this pair and there is also this week’s AUD RBA interest rate decision to impact here.

Price is below the 4hr Cloud but above the daily Cloud so this pair could remain choppy.

  • I’m watching for any new TC signal on this pair.

GAmonthly GAweekly GAdaily

GAdaily

GA4

GBP/NZD: Last week’s NZD$ strength helped to drag this pair back below the key 2.10 S/R level and recent 61.8% fib region and both outcomes are bearish for this pair. However, the RBNZ interest rate decision will impact here this week and so watching for any make or break from this 2.10 level might be the best way to play this pair.

Price action is below the 4hr Cloud and right at the bottom edge of the daily Cloud.

  • I’m watching for any new TC signal and the 2.10 level.

GNmonthly

GNweekly GNdaily GN4hr

EUR/AUD: The EUR/AUD has chopped around either side of the 1.55 level for the last five weeks. Take a look at the monthly chart and you will see that this is a key S/R level for this pair. May closed with a bullish monthly candle but still below this 1.55 region which isn’t too convincing. Watch to see how this week’s RBA interest rate decision, ECB Draghi speech and CNY data impact on this pair.

Price action is below the 4hr Cloud but above the daily Cloud which suggest further choppiness.

  • I’m watching for any new TC signal here and the key 1.55 level.

EAmonthly EAweekly EAdaily EA4

EA4

AUD/NZD monthly: I’m still watching a possible bullish-reversal ‘Inverse H&S’ build here and will be keen to see how this week’s RBA and RBNZ interest rate announcements impact this pair. As far as I am concerned this pattern remains viable as long as it holds above 1.045:

ANmonthlyCloud

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