Good evening team,
We have a pretty busy economic calendar in the second half of the week. We will most likely have an active couple of trading days.
Profit taking has been seen on the short side of the USD after another leg lower to end the month of August. EURUSD, AUDUSD and NZDUSD all edging lower leading into the US session. There are mounting concerns regarding a second outbreak of Covid-19 across Europe. The Covid-19 pandemic appears to be easing across the Sun Belt in the US after two disastrous months. Whether the outbreak picks up again after the upcoming Labor Day long weekend and the resumption of school is yet to be seen.
There is complete insanity in the US stock market which is disconnected from the economic conditions. The US has still failed to agree to the second stimulus package yet US indices continue to rally in anticipation of the agreement.
Recent developments from the FED suggest their focus is shifting away from a specific inflation target towards an average. Additionally, their focus is to achieve maximum employment putting weight on the US labor market.
With that in mind, this week’s data release from the US is especially important, starting tonight with the US ADP employment change at 10:15pm. The US is forecasting roughly 950k people returning to work from a 167k the month previous. The big announcement will be seen on Friday with the unemployment rate and US non-farm payrolls taking center stage. The US is forecasting unemployment to decrease from 10.2% to 9.8% with 1.4million new jobs created in the NFP. Markets may begin to price in a strong results coming from the US meaning gold prices could suffer leading into Fridays announcement.
GOLD – 1 Hour Charts
Golds chart is looking very messy with some whipsaw action last week. The metal finally broke to the upside of the pennant formation, well done members who traded the structure breakout. Due to the inverse correlation between GOLD and the USD we will be looking to take a sell position from the right shoulder level.
Trade Setup: SELL LIMIT – Entry price 1975, stop loss 1987 and take profit 1943.
Stop loss: 120 pips
Take profit: 320 pips
I would highly recommend watching gold during the announcement if possible.
The set up becomes invalid if the market breaks above the shoulder line.