The NFP is due in some hours, and we found 3 potential trading opportunities before and after the release, in NZD/USD, GBP/USD and USD/JPY. Below you can check the current market background, short-term trend and nearest supports/resistances for each pair. As always, we are using VSA, and associated indicators, for a supply/demand view of the market.
NZD/USD M15
Background: Strong
Short-term trend: Down
Support: 0.68500
NZD/USD may be a solid trading opportunity for a late Tokyo Session or early London. We’re approaching a major news announcement and, if NZD/USD retraces after the announcement, it may be a good buying opportunity near the long-term support at 0.68500. If prices touch the resistance and bounce back, traders may open a long position, which will be reinforced in case there are demand signals. Low volume bars during a downtrend near a resistance may also anticipate a trend reversion.
GBP/USD 1H
Background: Weak
Short-term trend: Neutral
Resistance: 1.29648
Support: 1.28631
In this case, we see a long-term downtrend and prices near the upper bound. After the news, in the case of GBP/USD appreciates and touches the trendline, it may be a good opportunity to short. This is because there was distribution before, and if NFP doesn’t change things radically, it could give a shot to trade GBP/USD.
USD/JPY 1H
Background: Strong
Short-term trend: Up
There are no supports, neither resistances nearby. However, we saw an uptrend that was broken with high volumes during the US session. News about US employment are due in a few hours and it will bring some volatility. In case prices approach the trend line from below, it may become a short opportunity. Look for low volume bars approaching the trendline.
The NFP will dictate what happens next, but by being alert to what’s happening now, we can better plan our trades.
In today’s Tokyo’s session I found 2 potential opportunities for the next session, on 2 of the major pairs: GBP/USD, and USD/JPY.
GBP/USD 30 MINUTES
Background: Weak
Short-term Trend: Down
Support: 1.2767
Resistance: 1.2904
GBPUSD 30 Minutes
- At this point, we can see distribution (many supply signals on sideways movement)
- Based on this weakness behind, wait for a short BREAKOUT alert from Alert System.
The next news important news (Retail Sales m/m) is in roughly 8 hours, so, be sure to look for a breakout afterward. Depending on the news result, there could be a reversal near the 1.27 support – let’s wait and see what VSA shows at that area.
USD/JPY 1 HOUR
Background: Neutral
Short-term Trend: Down
Support: 109.213
USD/JPY Hourly
- Prices broke out the 109.213 resistance with high volume in today’s US session. There is latent supply shown by VSA supply signals
Although there was a breakout, the background is still neutral due to the recent supply signals. Still, if no more supply shows at these prices, I am still bullish, and looking for a long position, on a low volume down bar, above 109.213. The Alert System is also likely to alert if prices get nearer.
Daily
For the past months, Euro/Yen has seen buying between 121.00 – 124.50, shown by the multiple strong signals at this area, and the high volumes at the bottom. It’s a quite loose accumulation pattern, since the market made a lower low at mid April (point 2) than the first bottom at February/2016 (point 1), along with the very significant selling seen on the lower timeframes, on the last rally (point 3). There is also a down trendline nearby, and due to these reasons, I’d be more inclined to trade a break-out of it on a lower timeframe such as H4, where it’ll be easier to manage the trade for a faster exit.
4 Hours
In the 4-hours timeframe, in point 1 VSA marked the bar as Major Supply, and as Supply using multi-timeframe analysis (showing as a circle). In this lower timeframe the most recent buying can be more easily seen, starting in point 2, where the arrows are pointing. Those are either high volume bars (red painted bars), which after a strong fall and price congestion, show demand in a more ‘disguised’ way than the VSA signals, and 2 VSA Demand signals. In point 3 there is another Demand signal, which is also a churn.
It’ll be valuable to see if there is a break-out of the trendline for a long trade, and to be alert for supply signals in the zone of previous supply, painted as the red rectangle. At 24/May (Tuesday) German ZEW Economic Sentiment is being announced, which if positive, could provide a price boost towards 124.670.
In this trade a long was taken at the strong VSA signal, though there was distribution behind. This is seen by the multiple Major Supply signals, with the prices not advancing further. A bit after, there was an upthrust bar (pink bar), showing more supply, and a successful no-demand test (light pink bar).
In the entry point there was some buying, though it wasn’t enough to stop the trend. The buy-stop should also have been set above this bar’s high (https://www.analyticaltrader.com/trading-guide/vsa-trading-setups/trend-trading/supplydemand-background/), which comes as a price confirmation of strength.
After breaking the down trendline mentioned in our latest analysis post, AUDJPY started a healthy uptrend. On the 80.500-80.600 level high volume without any price progress was seen, and on a news event it went down on a wide range, in the 15 minutes timeframe. On a reaction to this down move, while the background was weak, a down reversal appeared (on sensitivity 4, which has the best Rating on this pair/timeframe), where the short was taken. A Minor Supply Signal confirmed the weakness on this reaction. The stop-loss was set above the previous high, and the take-profit near the up trendline, for a +29 pips move.
