The much anticipated NFP was released and while it was below expectation, we can say it was fairly strong and good for the economy. Participation rate ticked lower to 62.8% from 62.9% recorded in September and continued to hover around multi decade lows with structural reforms needed to counter this trend. On the flip side, the annualized hourly earnings improved to 2.3% and while the economy churned out 161K jobs with news that there were revisions up of 44K jobs for the month of July and August. The general unemployment rate came in as expected at 4.9%.
This mixed news implied that the economy is good and could encourage investments in the short to long term while putting more pressure on the FEDs to act. The only thing that investors and institutions should worry about is tomorrow’s tight presidential and congress election which is keeping the market on the edge especially if Trump wins. If he does win, then there will be some crazy market movements.
To the charts and today, the market opened with a gap up this was quickly countered by the resistance zones highlighted in the 15 min charts on Friday. It’s easy to also note that prices on the 15 min chart has been moving horizontally within a tight trading range of 40 pips. This trading range is at the overbought stochastics in the 4HR chart where there is also a clear sell signal and an overextended price closing beyond the upper BB in the daily chart where there is a sell signal which has formed. Most importantly, look at how the closing price in the daily chart closed beyond the upper band. Historically, this overextension almost means price will trend lower and it did, bringing the market to equilibrium.
Today, I look to trade as follows:
Sell Limit: 0.7320-with an overbought stochastic in the 15 min chart.
Stop Loss: 0.7350-Today’s highs
TP: Trail your profits.