For the better part of yesterday’s trading there was no significant economic release to cause volatility in the market. What caught my attention however was the release of the Labor market condition index which was created by the Federal Reserve to provide an overall labor market snapshot of the economy. Being an all inclusive index, it identifies and reports any contraction or expansion within the market when it comes to matters supply or demand of labor. Well, the release showed some decline and over the last 8 months, the LMCI has been trending lower on revision. On September LMCI was reported to decline by 2.2% following August decline of 1.3% and with this downward trend, the FED governors will have sufficient reasons to maintain their cautious tones since there is some under-reported slack within the labor market. This therefore means tightening will be implemented slowly and cautiously while maintaining the FEDs targeted labor market averages.
To the charts and this is what should be expected, with yesterday’s break below the 0.708 support line, our next target is to sell if there is any retracement back to the 0.708 support zone and a confirmation candlestick in the 15 minute chart around that price tag. Look to sell at that area, if price trend higher then it should correct at around 0.7100-0.712 zone since there is resistance at that area.
So trade as follows:
Sell Limit: 0.708-0.712
SL: 40 pips
TP: target Brexit lows of 0.695
Otherwise, watch out today’s FED minutes at 18:00 GMT and have a good trading day