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Dollar weakness to continue post-nonfarm payrolls

Obviously a lot depends on the nonfarm payrolls release out of the US today, but the charts are telling me there is a strong chance the US dollar will continue lower after we spotted a double top at important 500-day moving average resistance at 95.50/95.55 at the end of last week. The shorts continue to work as the index breaks the trend line support seen in the daily chart seen below. This presents trading opportunities across a host of dollar pairs.

The AUD/USD bounce from just below important longer-term 61.8% Fibonacci support at 7330/25 has triggered a consolidation to ease oversold conditions as it moves to 7360, 7390/95 and the strong resistance at 7425/30. This is the main challenge for bulls today. A break above 7450 targets a selling opportunity at 7495/7505, with stops above 7530.

The downside is expected to be limited with minor support at 7365/60 (we bottomed exactly here yesterday) and a buying opportunity at 7330/20, with stops below 7290. A break lower (and a weekly close below for confirmation) is a sell signal targeting 7260/50 and 7210/00.

NZD/USD bulls are winning as the pair recovers to rise back above the one-year trend line at 6740/35 to prove this was a false break on Monday and the target of 6770/75 was hit.

The next target for buyers is 6820/25 and the strong resistance at 6850/60.

A high for the week is likely so take profit on all longs. Failure to hold above 6770/75 risks a slide to a buying opportunity at 6735/25, with stops below 6680. A sustained break below 6680 (and a weekly close below for confirmation) is a sell signal for the start of next week targeting 6660/50 and 6610/00.

The EUR/USD bullish double bottom holds just above the 550-day and 100-week moving averages at 1.1445/1.1435 for a more positive outlook. Now, through resistance at 1.1680/85, to the next target of 1.1720 and above here today tests strong resistance at 1.1750/60. This is now key to direction. Bulls need a weekly close above here for another buy signal at the start of next week targeting 1.179/1.1800, 1.1820 and the June high of 1.1840/50.

Failure to beat 1.1720 targets 1.1680/70 (currently holding) then better support at 1.1640/30. Downside is expected to be limited but below here look for 1.1585/90. Further losses meet support at 1.1530/10.

A USD/CAD double top at the longer term 50% Fibonacci resistance triggered losses last week. This week the pair trades sideways and is in a consolidation phase. With no buy signals, the outlook remains negative. Further losses look likely, eventually targeting strong support at 1.3060/50. A short-term bounce from here is expected, but a weekly close below is another sell signal for the start of next week targeting 1.3010/00 with very strong support at 1.2985/75 for profit taking on all remaining shorts.

Gains are likely to be limited, with resistance at 1.3165/75, but stronger resistance at 1.3210/20 is key to direction. Above 1.3240, however, targets 1.3275/80.

GBP/USD longs are looking at important 500-day and 100-week moving average support at 1.3075/70 which are working perfectly as we reach the next target of 1.3250/60. The outlook remains positive, with further gains targeting 1.3290 and the two-week high at 1.3310/14.

Downside is expected to be limited, with minor support at 1.3180/70 and 1.3140/30, but with obvious hugely important support at 1.3075/70; stops below 1.3030. A break lower (and weekly close below for confirmation) is a sell signal targeting 1.2995/85 and 1.2920/10.

Gold has bottomed exactly at an important two-and-a-half-year trend line support level at 1240/38, and is also holding just above the important 200-week moving average at 1234/33.

The expected bounce hit all our targets as far as 1255/56 and 1260/61. We topped exactly here, but I think this is just a consolidation before another leg higher. Further gains are expected, eventually to 1265 and resistance at 1267/69. Strong resistance at 1272/74 is more of a challenge so we’ll take all remaining profits here.

Failure to hold above 1253 risks a slide to 1247/45. Downside is expected to be limited but obviously try longs at 1240/38 with stops below 1230.

WTI crude has rejected important six-month trend line resistance at 7500/7510 in overbought conditions. We bottomed exactly at the first short-term 23.6% Fibonacci support level at 7250. The outlook remains negative so gains are likely to be limited, with first resistance at 7350/60.

Watch for a high for the day. If we continue higher we could target 7420/30, but of course look for a selling opportunity at 7480/7520. A sustained break above 7550 (and a weekly close above for confirmation) is a buy signal.

Eventually we are likely to break short-term 23.6% Fibonacci support at 7250. Below 7215 targets 7160/50 and perhaps as far as minor support at 7090/80. (Do not buy longs here!) A break below 7050 then targets 7025, 6990 and support at 6955/45.

Jason Sen

Technical Analyst & Trader

For more information, trading education and offers visit InterTrader

The content of this article is the personal opinion of the author and not InterTrader. You should under no circumstances consider the information and comments provided as an offer or solicitation to invest. This is not investment advice. The information provided is believed to be accurate at the date the information is produced.

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