We’re avoiding the high uncertainty the Greenback may bring with the U.S. Presidential election under way, we’re looking at setups in the crosses and found a simple one in NZD/JPY ahead of NZ employment data.
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on EUR/USD ahead of today’s U.S. Presidential election, so be sure to check that out to see if there is still a potential play!
| Equity Markets | Bond Yields | Commodities & Crypto |
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DAX: 11972.67 +1.56% FTSE: 5759.29 +1.84% S&P 500: 3358.76 +1.47% NASDAQ: 11078.77 +1.11% |
US 10-YR: 0.886% +0.038 Bund 10-YR: -0.621% +0.017 UK 10-YR: 0.254% +0.034 JPN 10-YR: +0.04% +0.004 |
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Fresh Market Headlines & Economic Data:
Dow futures rise more than 300 points on U.S. Election Day
Oil prices extend rally on U.S. election day
Global dairy prices: -2.0% since Oct. 20
EU to consider escalating legal dispute with Britain over divorce treaty
Brexit talks fail to agree on fisheries, two other issues
Swiss consumer prices remained stable in October
China to Halt Key Australian Imports in Sweeping Retaliation
Upcoming Potential Catalysts on the Economic Calendar
Australia Construction Index at 9:30 pm GMT
API Crude Oil stock change at 9:30 pm GMT
New Zealand Employment Change at 9:45 pm GMT
Australia Services PMI at 10:00 pm GMT
Bank of Japan Monetary Policy meeting minutes at 11:50 pm GMT
U.S Presidential Election
Australia Retail Sales at 12:30 am GMT (Nov. 3)
China Services PMI at 1:45 am GMT (Nov. 3)
What to Watch: NZD/JPY
On the one-hour chart above of NZD/JPY, we can see the pair has formed a descending channel over the few weeks, and it looks like the market is back to retest the top of that falling channel. With stochastic suggesting overbought conditions (and diverging with price), is this the time for technical sellers to take back control?
Well, we’ve got the latest quarterly employment numbers from New Zealand coming up in a few hours, and if breaks from the expected -0.7% decline in employment, we could see the bulls take control and the channel break, especially if risk sentiment continues to remain broadly positive.
In that scenario, look for a break-and-retest setup before considering a long position if momentum does not pick up for a potential swing position. If momentum is strong to the upside, consider scaling in from market levels down to the broken falling ‘highs’ pattern to balance the risk of being perfect with your entry and missing the move.
In a scenario where the NZ jobs data disappoints and we see a broad shift in risk sentiment towards negative, look for that falling ‘highs’ pattern to hold before considering a short position. If it does, this creates a high probability, high potential return-on-risk if using the daily ATR (around 60 pips) as a stop guide and the bottom of the channel as a max profit target.
