NFP Creates Whipsaw, What Comes Next? August 10th 2015 Fx Commentary
Last week was chalked full of economic data releases, especially towards the end of the week. On Thursday we had a weaker than expected Pound release as only on member voted to hike rates vs the expected 2. Friday then brought out a very uneventful release with numbers not much different than expected. As far as overall market sentiment, the COT data showed further buying in the Pound. It is important to remember that the COT data only incorporates what occurred up to Tuesday. Therefore we will not knowing whether the market is overall bullish or bearish on the two major releases last week. With that being said the current COT still shows buying pressure in the Pound and thus warrants our attention.
Another interesting point from the COT is what occurred in the Aussie. In general I don’t trade the Aussie personally but for those of you that do the latest fresh lows in the Aussie were not supported with further selling. Are we beginning to see smart money finding value in the current price in the Aussie? As I mentioned in tonight’s daily market review video, while this may not be a turning point for the overall down trend it may mark a short term retracement. As we are short term traders that is all I really care about.
Big False Test Of Previous EUR/USD Lows
NFP created a major rejection from the lows on Friday. Generally a move like that has further follow through beyond just that day. With that being said I would not be surprised to see the Euro rise near the beginning of the week. Overall I still favor a Euro short and any rise early on will likely be met with selling later in the week. Like most days I’m still open on direction. The bottom line is the current market conditions shift price so rapidly from day to day that long term sentiment is likely wrong. As a result you have to be open to what the market is telling you in real time which is why I stay open to trading from any of the listed manipulation points in the chart should a valid trade setup occur once the price reaches that point. Today on the EUR/USD there will not be an exception to that.
COT Shows Continued Pound Buying Pressure
The COT is still showing buying pressure in the Pound and I believe this week will answer that question. If you look at the Daily chart of the Pound you will noticed a continued upward sloping trend line that is being retested. As we tested this level on Friday the price made a strong rejection back to the upside. Generally I don’t pay attention to trend lines, but on the daily chart they are heavily observed and liquidity often sits around them. With that being said a clear break will likely signal further downside while a push up today may confirm the rejection and set direction for the week. At this point we do now know what the COT data will show from Thursday and Friday as the latest numbers only represent what occurred up until the 4th last week. That is going to be very important as the biggest news occurred on those two day. At this point we will have to rely on the price action to give us the indication and therefore at the beginning of the week I will still remain open on direction.
For those of you who are members make sure to check out the daily market review as we had a nice setup on the GBP/USD long from Friday that setup during London. Based on our trade management rules the exit would have been prior to the Non-Farm Payroll release for 15-20 pips depending on your exit price.
Forex News For August 10th 2015
We have a bunch of FOMC members scheduled to speak over the course of the day. More than likely it will be more of the same rhetoric and therefore not a great deal to worry about. During a speech I highly recommend either watching it or having access to like squawk based news such as Talking Forex. If you don’t have access to one of the other then your really putting yourself in a dangerous position.
Want to learn the bank trading strategy, join our weekly live training room, talk to members in our forum, and have access to lifetime support? Learn more by clicking here.