I pointed out in Friday’s post that the market reacted to NFP with no great conviction. The knee-jerk reaction to the headline figure sent EURUSD up about 35 pips. Then the good news of the unemployment rate and average wage sent it down 130 pips without stopping for a break. So far so good. However, the second leg of the descent went nowhere.
Today was marked on my calendar as a potential reversal day. I was expecting a bottom. This, together with the lack of conviction in the dollar rally on Friday led me to believe that either we had seen the bottom, or that the market would make marginal new lows today before a resumed uptrend. It is too early to say if today was a reversal. The market would have to trade above today’s high tomorrow. We shall see. For now it’s looking good. If you read Friday’s post, you know already that I had 1.1085 as one of my support levels. The market bottomed at 1.1086.
So if you have been paying attention you are long EURUSD by now. Your main job for the moment is to sip cognac and coffee in front of your screen and savour the moment. But don’t hold your position past Wednesday, which I also have marked as a reversal day (they seem to be closely packed lately…). Once Yellen speaks we may see a sharp pullback. Lets’ talk then.
Cognac And Coffee