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NFP Provides Potential For Reversal Plays

Published 01/06/2013, 05:55 PM
Updated 07/09/2023, 06:31 AM

So NFP came in at exactly the 150k estimate which caused some interesting price action on Friday with most pairs bouncing off of support.

This has lead to some interesting set-up options for this week, especially as a few played out exactly where I had previously highlighted to watch for signals.

Earnings week starts this week in the US, and this can often have an impact on risk-on trading. Something to be aware of.

So instead of wasting any time, let's get straight into them.

EUR/USD
The euro pushed lower, then bounced today.

Potentially, this could be caused by some profit taking but it did give us a small Pin Bar trend.

I highlighted the likelihood of the 1.3050 mark to offer support in this area for a potential long entry signal; therefore, this played out pretty nicely.

There is strong resistance above at the 1.3180 and 1.32 mark, but there are a few things aligning.

  1. Signal at suspected support level
  2. COT pointing to further upside
  3. Break of weekly high - normally look for a retracement before a push higher
  4. Risk-reward is achievable with resistance above

That said, this isn't the strongest of signals and given the momentum last week we could still be looking for a push lower to the bottom of the range.

Therefore, it is not an ideal set-up but if you can make at least 2 rewards per risk, it is definitely worth considering.

Alternatively, a small bounce could provide further sell signals towards the 1.3180 mark; a break above 1.3300 would result in a much larger push higher.
$EURUSD (Daily)  19_10_2012 - 04_01_2013
The cross in the EUR/USD COT Strength indicator is also highlighting long opportunities.
$EURUSD (Weekly)  Week 23_2011 - Week 1_2013
GBP/USD
The pound initially pushed lower but retraced some of the moves in the afternoon.

We could see a move higher next week, either in the form of a continuation of an uptrend or potentially as a retracement of Thursday's push lower.

The signal on Wednesday, January 2nd played out well for those of you who caught it, offering a nice return.

We can now look for two potential strategies:

  • Either a push lower to key support and the 200-day moving average; or
  • A push higher to retest the channel top

I suspect there are still quite a few offers in this pair and therefore we could easily see a bit more of a move lower first.
$GBPUSD (240 Min)  07_01_2013
$GBPUSD (Daily)  09_10_2012 - 04_01_2013
The weekly chart points to further weakness and a potential false break from the weekly high.
$GBPUSD (Weekly)  Week 11_2011 - Week 1_2013
AUD/USD
The aussie has put in a rather large Pin Bar today. There is a nice signal here, although, getting at least a 2:1 reward per risk is pretty difficult given the key resistance not far above.

If we get a pullback into the signal and a retest of the support by 1.0420 we could get a better risk reward. However, as it stands, we would be looking for this pair to break weekly highs (and almost yearly highs) in order to get a good risk reward ratio on this.
$AUDUSD (Daily)  26_09_2012 - 04_01_2013
$AUDUSD (Weekly)  Week 20_2011 - Week 1_2013
USD/JPY
The dollar is still pushing higher against the yen, showing the importance of night fighting the trend or jumping short too early.

I still wait patiently for my short opportunity.
$USDJPY (Daily)  03_10_2012 - 04_01_2013
The COT report points to weakness up ahead and therefore I still prefer looking for short opportunities at these levels, however, do need to see some clear strong signals before jumping on the trade.
$USDJPY (Weekly)  Week 13_2011 - Week 1_2013
EUR/CAD And GBP/CAD
Interesting alternative for EUR/GBP strength.

Quite an aggressive move last week with a rejection not far from support.

On the EUR/CAD, this pair could easily test the 200-day moving average but overall Bullish bias this could pay off relatively well with good risk reward.
$EURCAD (Daily)  08_10_2012 - 04_01_2013
GBP/CAD offers another option, again with rejection of the 200-day moving average.
$GBPCAD (Daily)  26_09_2012 - 04_01_2013
NZD/USD
Interesting setup on the Kiwi dollar. Offers slightly better risk reward than the aussie with a smaller risk.

Key resistance comes in at 0.8475.
$NZDUSD (Daily)  01_10_2012 - 04_01_2013
EUR/NZD
Continue to like this for a short option highlighted.
$EURNZD (240 Min)  07_01_2013
Rejection of upper prices on the daily also supports this.
$EURNZD (Daily)  18_09_2012 - 04_01_2013
USD/SEK
Having discussed a Head and Shoulders formation on the USD/SEK chart, we now also have a supporting Pin Bar pointing to USD weakness.

Suspect we might get some dollar strength initially but this does offer nice risk reward given the break of the pivot low on the weekly chart as well.
$USDSEK (Daily)  10_10_2012 - 04_01_2013$USDSEK (Weekly)  Week 37_2011 - Week 1_2013
USD/CHF
Alternative to the EUR/USD should you want one.
$USDCHF (Daily)  08_10_2012 - 04_01_2013

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