So the much anticipated NFP came to pass and the stakes that were there were almost nullified. The fact that rate decision could be based on NFP made the Friday occasion special in its own way and considering the historical bad NFP for the month of August, it was no surprise that NFP came in lower than expected. This NFP like most other releases was volatile and came along with brutal whipsaws-just like the others. We can almost say that this job report was not that spectacular but yes, it was not that solid either and with unemployment rate increasing or remaining constant at 4.9% it was nevertheless accompanied by increasing average hourly earnings and not so many jobs churned, investors saw this as an opportunity to dump the USD but when logic kicked in, they released that the economy is not that bad and employment in the US was growing but not at a rapid pace like those reported in June and July. As always, the Feds place great emphasis for wage growth and we saw that both weekly and hourly wages grew, though moderately for last month and all this was spearheaded by the education and health sectors-which are leading indicators for job expansion and recovery. If you also check the Private Sector diffusion index, you will realize that new jobs were evenly distributed within all sectors and were close to those of June and July records. This therefore is bullish for the USD and this month remains a prime candidate for a small rate hike.
To the charts and we can see that whipsaw that took both sides of positions. Price edged up and sharply reversed from the daily resistance trend line levels at 0.734 and even though price action opened with a gap down today, it has since been closed and price is been rejected at that level again. If you check the 15 min and 4 Hour charts, candle sticks-especially in the 4 hour chart shows signs of reversals every time it approaches this level and therefore we shall practice caution and see where this candle stick in the 4 Hour chart closes. Also, keep in mind that today is a US Bank holiday so like all Mondays, volumes should be light and average range should fall within the normal levels.
I will maintain my bearish stand today and look to short at all highs today in the 15 min chart and unless there is a strong break-out above the daily resistance trend line in the 4 hour chart, I will change my tack and go long.
So here is my plan:
Sell Limit: 0.734-0.735
TP: 0.705 with a trailing stop
Have a good trading day.