The Non-Farm Payroll numbers for January, came out at 157K, missing the forecast of 161K according to forexfactory.com. We saw some volatility following the NFP. There were some shakes in the USD and JPY crosses as well as USD/JPY, which eventually broke to the upside to new highs on the day/week/year. The EUR/USD also had a similar shake, but the Sterling did not join the party as GBP/USD fell sharply.
EUR/USD 15min chart 2/1/2013 11:10AM EST
EUR/USD: There was consolidation ahead of the jobs report. The EUR/USD initially rallied after the NFP, but failed to break above the session high at 1.3675. Then if fell below intra-session, pre-NFP consolidation, and dipped below 1.36 to 1.3590, hitting the 200-15-min SMA. This was the shakeout. Then a sharp rally followed bringing the pair to new highs. This resumes the bullish uptrend it has been in, since July 2012! At the moment, it is busting above the 1.37 handle. I have discussed a possible “target” of 1.3830 which is at the 61.8% retracement of the 2011-2012 decline from 1.4939 to 1.2041.
Be careful trying to pick a top against this sharp rally. Instead breakouts for bullish continuation have been a successful method, or buying on dips, if you are good at catching retracements.
GBP/USD 1HR chart 2/1/2013 11:20AM EST
GBP/USD breaks down trendline: Other currencies are gaining against the USD and JPY as well, going back to its prevailing bull trends. However, GBP/USD slipped sharply. Looking at the 1H chart, we see cable sliding below a rising trendline from Jan. 28, falling below 1.58, and establishing some bearish momentum as the RSI tags 30. Overall, it shows lack of direction as the RSI goes from 30 to 70 to 30, and price whips up and down the 200-hr SMA. In the short-term, there is pressure toward the 1.5676 low and if that breaks, we might have some bearish continuation at hand (since falling from the 1.63 area to start the year).
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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