Trade view /
03 June 2016 at 7:43 GMT
USD Index: It's always a hard job analysing the markets into the nonfarm payroll figures as there are normally two scenarios to choose from, one with a higher percentage chance of being correct.
Bullish: Daily chart highlights a three-wave correction from the 161.8% extension at 95.85 (from 91.88-94.33) now complete. Buyers have returned.
Bearish: The intraday chart highlights a 261.8% extension complete at 95.75 (from 91.88-93.36). A possible bearish Head and Shoulders is forming with a break of yesterday’s low taking the index down in a corrective manner.
With bespoke support at 95.22, we are on the side of the bulls.
USDCHF – Taken a small USCHF long this morning and here is why:
Market Profile – First and foremost, this morning’s Initial Balance was above yesterday’s Value Area. This normally dictates that the trend will continue.
Monthly – Bullish Outside month for May from trend line support. This normally dictates the start of a new trend.
Weekly – Wedge breakout. The measured move target is at 1.0248.
Daily – Broken through the trend line resistance and paused (consolidated) close to the 161.8% extension level of 0.9958 (from 0.9442-0.9761). This is seen as a fourth wave correction. Also, note how the pullbacks in wave 2 and 4 have been mild, highlighting the strength of the trend.
The most important factor here is the 261.8% extension level (1.0277) being close to the wedge breakout target at 1.0248. This makes a great medium-term play with good risk/reward
Management and risk description
Entry: Market (long at 0.9907).
Stop: Initially at 0.9860 (may look to raise before the figures).
Target: Intraday has a flag target at 0.9940. Medium-term 1.0250.
Time horizon: Medium-term target could take 3 days or 3 weeks. The 5th waves are very hard predict.
— Edited by Clare MacCarthy
Non-independent investment research disclaimer applies. Read more