I have posted several times on getting a set up and then moving to a lower time frame for the better entry and stop loss. Might as well reverse that logic. Another way to see if the entry is as good as you think is to back out and look at the bigger picture. That is one of the things ForexLive does so well is give you lots of views of the same event. While not everyone agrees with the call (I’m about to disagree with the boss, pray for me). You do get a good look at why the call is made and the reasoning. My belief is that makes for an informed decision no matter which way you choose to use the information. The NFP is a fickle beast and often what I call a “transitory factor”. Sure it moves the market for a big swing short term, but often the market comes right back in the next few sessions. I did observe something interesting in this last round though. While the USD as a single currency rebounded for the most part on the slightly bullish numbers (the employment 6.7 being the down side) The USD/CHF and EUR/CHF traded almost in unison. Both pairs rose and fell together. To me this indicates a larger “risk off” sentiment (we think you’re all on the sauce). While the commodities have enjoyed a relative disconnect from risk trades, current resistance levels may bring them back into the fold. I went out to the weekly charts and drew in some trend lines and the AUD/USD stood out. I’m not so convinced today’s yesterdays pull back was just a normal ebb and flow versus a turn in sentiment. At the time I placed the short in the chart I wasn’t really thinking about the post just trading, so please excuse if it seems like I’m talking my book. Obviously we haven’t hit the top of the trend line yet, but there is the set up I like to see. It could certainly go higher. But based on distance between the lines it is a good R/R. Longer term I believe the AUD/USD is going to head higher, but I think we have one more good down run coming, and this is as good a place as any to start. While I don’t follow the Elliott Wave patterns this would be the 5th wave on the weekly chart starting in April 2013.
Note: I wrote most of this yesterday before the China data which only confirmed my bias.
H4 below:
And the Daily, notice the divergence setting up.
