Kicking off my U.S. Non-farm payroll (NFP) special with the setup that probably best suited for a short-term, USD bearish trade. Of course, the market can go anywhere with a symmetrical triangle setup like what we see in the USD/JPY one hour forex chart above, but the general sentiment seems to be a bearish one since price broke below the strong support at 121.00.
A downside break may not gain steam until below the minor support level of 119.50, with strong support likely around 118.50 (previous swing low). The top side resistance is likely to come around 121.00, the previously broken support-now-resistance area.
Cable price action has tightened up into a symmetrical triangle as well over the past couple of weeks, and given the recent weak sentiment on GBP and bullish sentiment on USD, this pair may be the best bet for a bullish USD play if NFP smashes expectations to the upside.
Where the market goes, look for upside sellers to show their face around the 1.5000 area that held strongly as resistance in March. A downside break may find its limits around 1.4650, previous swing low, but because of the longer-term trend lower, its less likely to hold.
Last but not least, here’s probably the best to play a news trade in a thin, holiday market. Liquidity is king in short-term trading, and it doesn’t get any better than EUR/USD in the spot forex markets. Ask anyone who had a CHF trade on during the SNB event in January, and you know that getting in and out quickly can play a huge factor on how badly you can get burned.
1.0800 and 1.1000 have been the strong levels of interest, keeping EUR/USD contained in a range for the latter half of March. This sets up a textbook consolidation breakout play with a potential 300 pip move to the upside until the next potential resistance level and 300 pips to the downside before major support.
Keep in mind that the weekly ATR is about 270 pips on EUR/USD, so it may take a pretty big surprise from the NFP event for this to truly be a short-term trade.
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To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis. Lucky for us, Pip Diddy fills us in on what we need to know about fundamentals with his Daily Forex Fundamentals.