- Initial jobless claims disappointed overnight (884k versus 850k expected). With more US citizens filing for unemployment than had been hoped, it suggests the economic recovery is losing momentum.
- The Nasdaq 100 (USTEC) fell -1.5% and briefly touched a 1-month low and the S&P 500 (US500) declined -0.8%.
- The USD weakened across the board, with several majors printing bearish hammers on the daily chart. Gold (XAU/USD) failed to act as a safe haven and fell to a 6-day low.
- No major calendar events today.
- Keep an eye on GBP pairs and the FTSE 100 for UK retail sales.
- CAD pairs and the TSX 60 (CANADA60) are in focus for Canadian retail sales. Ultimately traders want to see large deviations form expectation to provoke volatile reactions.
EUR/USD: Bullish Hammer at Range Lows
- A bullish hammer appeared on the daily chart after a false break beneath 1.1760 support. With the USD on the back foot, it shows potential for EUR/USD to rebound towards the upper range around 1.1965 / 1.2000.
- A break above 1.8600 assumes bullish continuation within the range.
- A break beneath yesterday’s low invalidates the near-term bullish bias.
NZD/USD: Considering a Break of the YTD High
- The Kiwi dollar is the strongest major this week and is now considering a break above it YTD (year to date) high of 0.6788.
- If momentum wanes around the highs, counter-trend traders could consider shorting below resistance with a stop somewhere above it, and target the 0.6675 low.
- Trend traders could consider entering a breakout above 0.6788 or wait for a retracement towards prior resistance.
- The bias remains bullish above 0.6675.
Silver (XAG/USD): Waiting for a Bullish Breakout
- We remain bullish on precious metals overall, although gold appears weak after yesterday’s bearish engulfing candle.
- However, Silver prices have held up and instead produced a bullish hammer.
- Given the dominant bullish trend, we are waiting for a break above the 27.62 highs to assume a bullish continuation, and for silver to head towards $30.
- A break beneath yesterday’s low (before a break above 27.62) removes it from the watchlist.
FTSE 100 (UK100): 6,000 Remains Key
- On Wednesday we suggested there could be a minor new high before prices reversed lower, but price action suggests the top may be in place around 6130.
- Due to the bearish channel, the reward to risk ratio for bulls is unattractive on the daily chart. But if prices move towards the upper channel, bears may regain interest.
- However, if prices break below 6,000 it suggests we could see another bearish leg within the larger bearish channel.
NZD/CHF: Reached initial target around the 0.61480 high. Bulls may want to trail a tighter stop beneath the prior day’s lows and target the highs around 0.61850.
CHF/JPY: Bias remains bearish below 118.00 (original idea was based on the weekly charts). Yesterday’s bullish pinbar suggests a bullish retracement is on the cards. We will look for new bearish signals below 118.00
EUR/JPY: After pushing lower, a retracement is now underway. We are waiting to see if the 124.30/43 resistance zone holds as resistance before reconsidering shorts.
Gold: On the back burner. Yesterday’s bearish engulfing candle suggests another dip lower, although we remain bullish above 1900. We will continue to monitor for fresh bullish signals above 1900.
CAD/CHF: On the back burner (waiting for retracement higher to fade into).
GBP/JPY: Removed from watchlist. Yesterday’s bullish pinbar candle suggests a false break (bear trap) of 1.35.35 support.
USD/CHF: Removed from watchlist. Yesterday’s bearish pinbar candle suggests a false break (bull trap) above Wednesday’s high.