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I’m sitting by the sidelines this week, my friends!

With plenty of top-tier reports, especially the motherlode of U.S. data (the NFP report) just around the corner, I’m opting to sit by the sidelines and just observe price action.

I’m also taking it easy at the start of September since I’ve had a pretty shaky trading month in August. If you remember, my USD/CAD day trade and NZD/USD head and shoulder trades offset the gains in my AUD/USD day trade last month. With U.S. traders returning from their summer vacations this week, I’m preparing for a potential shift in trading environment.

For this week, instead of being gutsy (or careless?) enough to enter a trade at market, I’ll talk about the potential scenarios for AUD/USD this NFP Friday. Word from my friends is that analysts only expect the non-farm payrolls report to come in at 120,000 in August after printing at 163,000 in July.

AUD/USD Scenarios

If the NFP report prints below 100,000 then traders might interpret it as a sign that the Fed will be launching its QE3 program in its meeting next month. The Aussie could rally against the dollar and AUD/USD could shoot up from its current support at the bottom weekly ATR level, which is near the 1.0250 minor psychological handle.

On the other hand, a significantly stronger-than-expected NFP reading could be taken as a sign that the Fed would hold off stimulus for the month. This could boost the dollar against its counterparts and drag AUD/USD below the bottom WATR support. My friends on my AUD/USD thread seem to think this is the most likely scenario.

The last but definitely not the least scenario for AUD/USD is a direct correlation to the NFP report. That is, a slightly positive NFP reading could boost the Aussie, while a slightly disappointing number could weigh on the comdolls. After all, the employment numbers of the world’s largest economy is not something that investors ignore.

In any case, I’ll be watching AUD/USD closely. More specifically, I’ll be watching to see if the levels that we had marked in our Comdoll Trading Kit this week turn out to be valid inflection points during the report.

What about you? Do you have any positions open this week? Are you sitting by the sidelines too or are you trading the NFP?

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Have fun and good luck trading this week, friends!

Happy time

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This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.