In our weekly trends newsletter, “Is the trend still your friend” we advised that all traders long cable, who prefer technical analysis to make their trading decisions, should wait for a signal to confirm that the trend, which had began from July 10th, had finally broken down…
On the daily chart Cable had failed to make higher highs from July 27th to July 29th. We then observed the development of a classic doji, plotted using Heikin Ashi as our preferred candle. By July 31st traders should have observed that the PSAR had moved above price, this should have been the signal to close the trade had traders not used the price action displayed over the previous days cumulative with the doij candle. Thereafter many of the most preferred swing trading indicators began to turn negative; the MACD, the DMI, the RSI, stochastics and the Bollinger bands.
It’s not often a long to medium term trend is broken on the NFP jobs number publication. However, trend traders who are currently short cable may be concerned, given the miss by the jobs print, that the greenback will lose ground versus its major trading currency peers. At the announcement of the jobs print cable smashed through R1 to print a daily high on the second fifteen minute HA candle.
For trend traders the best advice could be to once again wait for the daily candle to close at the end of today’s trading sessions. Should the daily candle close as a doij, indicating indecision with regards to the FX trading community, them swing traders may wish to close their trade and wait for positive confirmation for the current trend to continue, or a new trend to develop.
However, if trend traders swung low cable from July 29th then they may feel confident that this NFP jobs print number is not enough to dent the major bullish USD sentiment in the markets, displayed across equities markets and strength for the dollar versus its major currency peers. As such trend traders may be prepared to weather the current NFP storm on their charts and maintain their swing-short position.
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