Forex Signals Brief August 4th – NFP Day, Buckle Up For The Volatility
Arslan Butt • 3 min read
We have made it through another highly profitable week and the credit goes to the highly volatile market. The forex trading securities such as currencies, WTI Crude Oil, and Gold (everything except for the global stocks) remained highly profitable throughout the week helping us secure a good number of take profits in our trading signals.
I'm really excited to trade today as we are expecting several high impact economic events from the United States and Canada which are definitely going to cause serious fluctuations. Let's take a quick look:
Top Events For Today
CAD – Employment Change is due to be released at 12:30 (GMT), but with a strong negative forecast of 11.7k which is well below the previous figure of 45.3k. The employment change is different from the unemployment claims. Employment change shows a change in the number of employed people over the previous month. The higher the figure, the better it is. Canada is also releasing the unemployment rate at the same time with the neutral forecast of 6.5%.
U.S – Here comes the Chief, the NFP. It's scheduled to be released at 12:30 (GMT) with a negative forecast of 181k, lower than 222K (previous). Moreover, the Unemployment Rate has a neutral forecast of 4.3%.
Forex geeks are anxiously waiting for the Non-farm payroll as it's one of the macro economic events which significantly shake the markets. It shows the change in the number of employed people over the previous month, excluding the farming industry
Now the question is whether it's likely to be positive or negative – only the time will tell. But a logical guess, considering the ADP Non-farm payroll, is it's likely to be close to the forecasted figure. Any surprise change in the figure will be an opportunity for us to trade.
Gold – XAU/USD- Potential End of Choppy Session
Today, global financial markets are likely to exhibit extreme volatility over the release of multiple fundamentals, including the gold. This week gold persistently traded sideways in a narrow range of $1259 – $1279, as we planned throughout the week.
As mentioned in my previous updates, the gold stayed below the $1279 and achieved our target several times at $1265 & $1259. The renewed bullish momentum was initiated over the geopolitical tensions between North Korea and the United States after another missile test by North Korea.
Gold gained a slight support on the ADP non-farm employment change readings as it fell short of forecast. It published a 178K rise in hiring versus the forecast of 187K gain in June. To make matters worse for gold, they also revised the previous ADP figure from 158K to 191K, indicating that we may see positive revisions for previous NFP figures. The latest US unemployment claims data recorded a drop from 245K to 240K during the previous week, but there was no significant reaction as the change wasn't surprising.
Key Technical Drivers – Intraday
Looking at the two-hour chart for gold, we can see it has crossed above the $1265 making it a support. It's still trading below $1272/73, the double top resistance. Stochastics have entered the overbought region, signifying the potential for a bearish reversal below $1272.
Gold – 2-Hour Chart – Double Top & Triple Bottom
Gold has crossed above 50 – periods moving averages, which is signaling investors' bullish bias, but as the market is choppy due to upcoming news, we need to ignore the EMA crossover.
Gold – XAU/USD – Trading Levels
S1: 1250 R1: 1271
S2: 1244 R2: 1278
S3: 1234 R3: 1288
Gold Trading Plan
If you want to trade gold today, I advise keeping a close eye on $1217, the crucial trading level.
Positive NFP – Have a sell position below $1273 with a stop loss above $1276 and a take profit at $1265 & $1259.
Negative NFP – Buy positions above $1259 with a stop loss below $1256 and a take profit at $1271. However, if the price breaks above $1272, we can hold our position until $1278.