As usual, every first week of the month, analysts wait for the release of financial data. This week, the focus is on the PMIs (due out on the Monday – Wednesday) and Non-Farm Payrolls (due out on Friday).
On Tuesday 4th October the Reserve Bank of Australia will announce any changes to the interest rate. News analysts are not expecting any changes although all traders should pay attention to the rate statement that the RBA will release. On the same day we expect a statement from RBNZ Governor Wheeler, which will give analysts a heads-up for November 10th, when a decision will be made on the Reserve Bank of New Zealand’s interest rate.
UK PMI data comes out on Monday with the Manufacturing, followed by Construction on Tuesday and Services on Wednesday. All this data will be taken into consideration when deciding on the Bank of England’s interest rate. At present we know that Carney, Governor of the Bank of England, has stated that if it is necessary, there will be a cut to interest rates before the end of 2016. We will see what the financial data coming out this week shows us. Another possible blow to the economy might be Theresa May’s recent announcement that Article 50 will be triggered by the end of March 2017.
In the USA, analysists will wait for the Non-Farm Payrolls out on Friday; as well as Monday’s ISM Manufacturing PMI and Wednesday’s Automatic Data Processing (ADP) Non-Farm Employment Change, before being able to judge whether or not the Fed decides to hike or cut the Federal Funds Rate or leave them unchanged. By paying attention to the information above, we are able to recognise patterns in the charts and see if any opportunities arise.
Nothing much changed for the Index Dollar last week. Indecision is still a strong factor for this currency. Technical and news analyst traders are all waiting for more information to unfold before starting to take position in either direction which makes it more difficult to trade some of the major pair currencies. It is quite possible that traders will need to look for trading opportunities with a shorter time span. One thing I would like to mention here is that in a market that keeps contracting, it becomes more difficult to trade as price movement becomes limited. When the NFP is released on Friday, I will hopefully have a better idea of the direction of the market. If negative data comes out on Friday, we will see a significant weakening of the US dollar which will break the diagonal support coming out of the wedge. I will be looking to see if the 93.00 price will hold as a support.
Just like the Index Dollar, the Euro Dollar made no big moves last week. In the weekly time frame you might notice the forming of a rectangular formation which indicates a continuation sell pattern. In the daily time frame the Euro Dollar is confirming the rectangular formation which indicates this currency pair is consolidating at present.
Trade opportunity: If the price hits the resistance price area again at 1.2860/70 and finds rejection, we will sell this pair to the support price area found at 1.11300, as we have approximately 150 pips area to trade. If instead the price rejects from its support first, we will take a buy position with the target being the resistance price area. Stop loss will be just above the 1.13000 price area if selling, or below the 1.11000 price area if buying. Remember to wait until rejection occurs on either the resistance or support before trading this pair. If the sell opportunity comes along and the price breaks the support area, I will hold the position until the price reaches the diagonal line showed clearly on the weekly time frame.
By Elkana Roveglia – TakeMyTrades.com