EUR/USD Presents Scalping Target Ahead of Non-Farm Payrolls

http://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/scalping_report/2011/01/06/EURUSD_Presents_Scalping_Target_Ahead_of_Non-Farm_Payrolls.html

The Euro extended its losses against the dollar as market fears over the sovereign debt crisis have returned as signs of slower growth have increased the chances that governments will struggle to pay down their debt. An unexpected 0.8% decline in Euro-zone retails sales reinforced growth concerns, but the results were offset by a rise in economic confidence and strong German factory orders. Continued strength from the region’s largest economy has kept afloat the Euro as European policy makers take steps to end the crisis in confidence for the troubled nations. The opposing forces have left the pair directionless which should continue with the U.S. Non-farm payroll report in tap. An improving outlook for the U.S. economy has fueled greenback bulls which should stand aside as they wait for further confirmation of sustainable job growth.

Key Technical Levels

Charts created using Strategy Trader– Prepared by John Rivera

A month long range between 1.3050 and 1.3450 has provided predictable price action and target level for entering and exiting positions. The 200-Day SMA at 1.3079 has come to define the lower bound and today’s test could lead to a period of consolidation with the major event risk ahead. A break of either level could lead to an extended move, but conviction could be limited ahead of tomorrow’s release. An itra-day channel has developed and scalpers should monitor it for opportunities.

Charts created using Strategy Trader– Prepared by John Rivera

Key Support/ResistanceLevels to Watch

Pair	S/R	Level	Spot	Valid Since	Market Influence
CAD/JPY	Resistance	200-Day SMA	84.41	06/23/10	High
EUR/USD	Support	200-Day SMA	13.080	12/02/10	Medium
GBP/USD	Resistance	Declining Trend line	1.5600	11/08/10	Medium

Quantitative Metrics

The EUR/USD’s Bollinger band width has narrowed to 408 pips has the pair has settled into a short-term range. The pair’s level of variance places it in the lower echelon of the majors enhancing its attractiveness as a scalping target. Daily volatility is also on the decline with the ATR shrinking to 130 pips, but ranking near the top of the most active pairs, a red flag for high frequency traders. The pair’s and overall implied volatility levels continue to rise, warning of sharp movements which are typically losing environments for scalpers.

Charts created using Strategy Trader– Prepared by John Rivera

Volatility / Activity Indicators

	EURUSD	GBPUSD	USDJPY	USDCHF	USDCAD	AUDUSD	NZDUSD	GBPJPY	EURJPY
ATR(14)	0.0130	0.0147	0.6761	0.0116	0.0077	0.0089	0.0086	1.2361	1.0267
ATR%	0.99%	0.95%	0.81%	1.19%	0.77%	0.89%	1.14%	0.96%	0.94%
20-5 Day SMA	-0.0043	0.0010	0.7504	0.0085	0.0095	-0.0074	-0.0138	1.2602	0.6642
Boll. Band Width	0.0408	0.0571	3.7440	0.0545	0.0287	0.0453	0.0492	8.6302	4.9407
1 wk Implied Vol	13.1525	9.8025	11.5250	13.1725	9.6100	12.9850	12.7800	11.1000	11.4550

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To discuss this report or be added to the email list, contact John Rivera, Currency Analyst: jrivera@fxcm.com

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