USDJPY forming a nice reversal pattern, remain bearish
Sell below 113.06. Stop loss at 113.96. Take profit at 110.97.
Reason for the trading strategy (technically):
Price has started to form a nice reversal pattern at our selling area. We remain bearish looking to sell at major resistance of 113.06 (Fibonacci retracement, Fibonacci extension, horizontal pullback resistance, bearish divergence) and expect a drop towards at least 110.97 support (Fibonacci retracement, horizontal swing low support).
Stochastic (34,5,3) is seeing major resistance below 95% where we expect a drop from. We are also seeing bearish divergence vs price signalling that a reversal is fast approaching.
Reason for the trading strategy (fundamentally):
It’s too tricky to call a move on NFP this month as there are too many mixed signals. Arguments for stronger payrolls include Challenger job cuts, employment component of manufacturing ISM rising, consumer confidence rising to 118.9. However, there is also strong arguments for weaker payrolls with Employment Component of Non-Manufacturing ISM dropping to 55.8 from 57.8, ADP Employment Falls to Lowest Level Since October, 4 Week Jobless Claims Average Rises to 243K from 239K, Continuing Claims Rises to 1.956M from 1.929M and University of Michigan Index Drops to 95.1 from 97.1. We lean slightly closer to USD weakness which means it is in line with our drop in USDJPY.
Reason for the trading strategy (technically):
Price has started to form a nice reversal pattern at our selling area. We remain bearish looking to sell at major resistance of 113.06 (Fibonacci retracement, Fibonacci extension, horizontal pullback resistance, bearish divergence) and expect a drop towards at least 110.97 support (Fibonacci retracement, horizontal swing low support).
Stochastic (34,5,3) is seeing major resistance below 95% where we expect a drop from. We are also seeing bearish divergence vs price signalling that a reversal is fast approaching.
Reason for the trading strategy (fundamentally):
It’s too tricky to call a move on NFP this month as there are too many mixed signals. Arguments for stronger payrolls include Challenger job cuts, employment component of manufacturing ISM rising, consumer confidence rising to 118.9. However, there is also strong arguments for weaker payrolls with Employment Component of Non-Manufacturing ISM dropping to 55.8 from 57.8, ADP Employment Falls to Lowest Level Since October, 4 Week Jobless Claims Average Rises to 243K from 239K, Continuing Claims Rises to 1.956M from 1.929M and University of Michigan Index Drops to 95.1 from 97.1. We lean slightly closer to USD weakness which means it is in line with our drop in USDJPY.