Pre NFP analysis: USD/JPY Inverse Head and Shoulders

November 03, 2017 12:59

As expected, the US Fed held rates on hold this month, with the US economy heading in the range of the full employment and inflation targets, most are expecting a hike next month, and the NFP forecast at 312k should give us the clues as to whether it will happen. US Equities continue to rise to new highs, the appointment of Jerome Powell is an interesting one, as he is not the traditional economist, which usually holds this important post. BoJ continue to buy ETFs and Bonds under their QE programme, and signs of Inflation are not so evident there despite the heavy money printing. I expect this pair to continue to strengthen, but expect volatility around the NFP outcome.

Due to inverted head and shoulders, price is generally speaking - bullish, but we need to know that NFP can reverse the trend. So., the USD/JPY has 2 possible breakout points. Have in mind that NFP in my opinion, will be volatile so two-way trading might be possible on mixed NFP and Wages data. A clear break of 114.20 after the NFP should target 114.25 ,114.45 and 114.70 with possible over-extension to 114.90. A break below 113.85 targets 113.70 and 113.40. Have in mind that the setup and entry in the market should happen only when the NFP/unemployment/wages data is announced.

W L3 - Weekly Camarilla Pivot (Weekly Interim Support)

W H3 - Weekly Camarilla Pivot (Weekly Interim Resistance)

W H4 - Weekly Camarilla Pivot (Strong Weekly Resistance)

D H4 - Daily Camarilla Pivot (Very Strong Daily Resistance)

D L3 – Daily Camarilla Pivot (Daily Support)

D L4 – Daily H4 Camarilla (Very Strong Daily Support)

POC - Point Of Confluence (The zone where we expect price to react aka entry zone)

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