In this brief post, we will outline our own market preparation ahead of the US jobs data which is expected to be around 400,000 jobs for the month of December 2021, according to Bloomberg Intelligence data.
Usually, at IWT we trade the most liquid markets for the week or the session and those are: Dow Jones futures, Nasdaq futures, Gold spot, GBPUSD, EURUSD and GBPJPY. The following will contain a brief analysis and trading plan for these markets:
🔵 EURUSD Daily Chart - January 7th
EURUSD has been consolidating inside a tough range between 1.1360 - 1.1220 for a couple of weeks now and price is preparing for a possible breakout soon. The NFP today will be a good catalyst to push price outside this range in hopes of new price exploration. We are holding a short position in EURUSD from 1.1307 with stop at 1.1366 and target at 1.1200. If price breaks above resistance level at 1.1360 then you should expect momentum to continue further towards 1.1420-1.1500.
🔵 GBPUSD Daily Chart - January 7
Cable may find some heavy resistance at the upper-bound of the channel at 1.3600 today. Overall sentiment is bullish for the USD and this has going on for a few weeks already, however, last month the Bank of England hiked the interest rate, hence surprising the markets and therefore, GBP gained against the USD. If the resistance level at 1.3600 holds on any tests today then we will be inclined to scalp on the short side for a pullback to 1.3480-1.3420.
🔵 Gold 4H Chart - January 7
We have been tracking a possible triangle scenario for more than 5 months in Gold now. You can read our blog post https://www.impulsivewavetrading.com/post/will-gold-tumble-after-fed-rate-decision-this-november. Up to now, the pattern has developed according to the text-book guidelines even though hard to scalp on the lower timeframes. For today, we believe that the price should continue to trade lower towards 1770 support zone and ideally find a bottom at 1755 Fibonacci cluster. Any strong push and close above 1810 will invalidate our short-term bias and expose higher levels: 1830-1850.
🔵 US30/Dow Jones 4H Chart - January 7
A few days ago, the FED signaled some hawkish tones than the market anticipated, hence suggesting a rate hike as soon as March 2022, compared to the May/June meeting. This new piece of information is currently being priced in on the price of indices, that is why DOW, NAS and SPX dropped in the past 2 sessions. The main concern for the market has been the ongoing rise in inflation and whether the FED is capable of maintaining price stability over the medium-term, considering this is one of their main duties.
US30 is trading at a short-term support area at the moment, 36,300, however, still below the previous all-time-high of 36,570. If buyers fail to push above the previous ATH then we may see Dow Jones trading lower towards 35,600 Fibonacci cluster zone. We are prepared to scalp both sides by trading the 15-minute timeframe during the US market open (for intraday trading setups, join our Virtual Trading room and #discussionBoard on telegram).
🔵 NAS100 4H Chart - January 7
We are still looking for a drop to wave c = 100% extension = 15,460 as long as price trades below the 16k mark. Any strong push above the 16k will make the bearish case even more difficult. In order to be safe on the buy side and keep holding tech stocks for longer, price must reach the 100% extension at 15,460 first and find a bottom there. If price reaches the 100% extension but does not close above on the hourly timeframe then Nasdaq may sell-off even more towards the next Fibonacci extension, the 161.8% = 14,700 which will be a heavy sell-off for the markets.
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Until the next time, "Be a Mindful Trader!"
Impulsive Wave Trading Team