From Craig Cobb at Trade with Precision:
The story of the week has certainly got to be the U.S. Dollar following the amazing non-farm payroll data that came out Friday evening. The largest increase of the year saw the greenback go gangbusters with the strongest increase of the year with 271,000 jobs added in October. To the average Joe this data will mean sweet nothing but, what does it mean to us, the traders?
Firstly. the USD is strong (did I mention that?) so this means my immediate focus shifts to the USD pairs. The pairs I focus on are AUDUSD, EURUSD, NZDUSD, GBPUSD, USDCAD, USDCHF, USDJPY and USDSGD.
With every single one of the pairs I trade now trending it opens up a number of opportunities to stalk trades this week. Without going into the detail of every single pair mentioned I will show you a breakdown of my plan for EURUSD.
As is shown in the EURUSD chart below, it is in a cracking daily downtrend.
The 4 hour chart is also in a great downtrend and offering opportunities when price has pulled back into the sell zone (10 & 20 MA). The first possible scenario is for the price to pull back into this zone again during the week and give me a trade setup.
Now looking at the 2 hour chart; what I really like about this timeframe is that there is a round number of 1.0800 right in the middle of the sell zone. This is now 2 ingredients in the same spot. Let me put in a Fibonacci level and see if there is anything else around that number.
Well what do you know, yes the 50% Fibonacci level is “clustering” with the round number and sell zone. So now the waiting begins to see if I get a pullback and then a trade around this level.
Keep in mind I have only looked at EURUSD and there are many other possible scenarios on other US pairs that may play out this week so do a thorough scan and keep an eye out for opportunities that fit your strategy rules. Don’t forget that if 2 or 3 trades set up at the same time that you will need to be aware of your risk; if you take 3 trades and they all rely on USD strength then you are essentially carrying 3 times the risk. Risk manage and choose only the best setups if and when they occur!
Have a great trading week!