First Non-Farm Payroll Of 2016 – Forex Analysis 1/8/16
Second Push Up In EUR/USD
As I detailed in yesterday’s forex commentary, we were looking for the second push to the upside in the EUR/USD. At the beginning of the European session we had a perfect stop run of our one listed manipulation point but it did not produce a valid confirmation candle. The confirmation candle is a secondary filter that confirms the reversal. In this case it just missed the criteria we use to be a valid confirmation candle and thus moved away without us. For today I will be looking for the third push to the upside. At this point we have two lower manipulation points from which I would consider a stop run reversal to go long.
Pound Finally Reversing?
After almost an entire month of downside price action on the GBP/USD, today is the first potential sign of reversal in the New Year. If you go out to your daily chart we are actually at the 2015 yearly lows, and created a stop run of those lows. I imagine quite a few traders got caught on the false push below the 2015 lows only to see the price complete the trap and snap back to the upside. After seeing the stop run and the ensuing push, we now have a valid first push up. Therefore, I will be looking for the second push to the upside tomorrow and I only have one lower manipulation point from which I would consider a stop run long from.
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Forex News For January 8th 2016
US Non-Farm Payroll 8:30 AM Eastern: NFP has been providing a very reliable pattern for the last year roughly. Whenever we have a 40K deviation from the expected number or larger, any entry in the direction of the spike on a 30-40% retrace has seen a fair bit of continued follow through and profit. On the smaller deviations keep in mind they like to use this illiquid time to trap traders. As most traders will sell breaks of lows and buy breaks of highs, this is the exact opposite of what you should be doing on the smaller deviations. Often the best strategy when we have conflicting data or a 20K or less deviation from the expected number, is to trade against the break of any major level. As always if your not familiar with that type of short term day trading strategy or style then avoiding it is the best option. For this month NFP is expected at 200K.