Short Term Update: US 100 Index in Focus Over Non-Farm Payrolls
Growth stocks within the US 100 index have sprung back into life this week, after a period of under performance, when compared to industrials and small cap stocks. The US 100 has added around 3% over the previous 4 trading days, supported by a rally in megacap stocks, led by Nvidia, after Fed Chairman Jerome Powell talked positively about the current state of the US economy in a discussion on Wednesday evening. This view has so far been supported by data readings across the week.
Now, with US Non-farm Payrolls due for release this afternoon at 13.30, all eyes are on whether this eagerly awaited reading will show a labour market that reflects a strong economy, while still allowing the Fed to cut interest rates again on December 18th.
Ahead of US Employment Data: Technical Update
As the dust settled on the US 100’s sharp acceleration into the November 11th all-time high, as it was at that time, following the Trump victory in the US election, a correction materialised, as a reaction to over-extended upside extremes.
However, this decline proved to be limited in nature, and buyers were found again around 20309, the November 19th low. Importantly, this also tested the uptrend in price activity evident since August 5th lows, suggesting it may well continue to be a relevant support moving forward.
As we approach what is likely to be the next important market sentiment driver in the shape of the latest payrolls data, price strength has again materialised from the uptrend support, to post new all-time highs at 21512 on December 4th.
While the uptrend, currently at 20849 within today’s price activity, has been confirmed as a possible support focus, equally important is today’s potential resistance level, standing at 21687. This is the upper trendline connecting the highs dating back to August 1st.
So, the levels we may want to watch over the data release are in place, and while it is important to note that closing breaks of these are no guarantee of future price movement, a confirmed breach of support or resistance may result in further price movement in the direction of the break, but this is very much dependant of future price trends.
What are potential resistance levels if 21687 gives way on a closing basis?
Closes above the 21687 trendline resistance would again see new all-time highs posted, so, we can then turn to Fibonacci extension levels to help provide areas of interest where there may be potential for sellers to be encountered.
Using the July 11th to August 5th last sell-off as the measure, the 38.2% extension stands at 22151, and 61.8% point at 23010. Just because trendline resistance breaks have in the past resulted in further price strength is no guarantee it will do so again, but if strength does develop after payrolls and 21687 is breached, these levels could be areas where upside momentum may slow, or even be held.
And Supports?
As we have said earlier, the 20849 uptrend is potentially the first support focus within any negative reaction to the data and closing breaks maybe the catalyst for further price declines.
If such moves do materialise, it's possible it may trigger further price weakness, with the 20309 November 19th low next possible support. If this in turn gives way, it might prompt tests of 19887/19904 support, a combination of November 4th session low and 38.2% Fibonacci retracement of the August/December strength.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
Now, with US Non-farm Payrolls due for release this afternoon at 13.30, all eyes are on whether this eagerly awaited reading will show a labour market that reflects a strong economy, while still allowing the Fed to cut interest rates again on December 18th.
Ahead of US Employment Data: Technical Update
As the dust settled on the US 100’s sharp acceleration into the November 11th all-time high, as it was at that time, following the Trump victory in the US election, a correction materialised, as a reaction to over-extended upside extremes.
However, this decline proved to be limited in nature, and buyers were found again around 20309, the November 19th low. Importantly, this also tested the uptrend in price activity evident since August 5th lows, suggesting it may well continue to be a relevant support moving forward.
As we approach what is likely to be the next important market sentiment driver in the shape of the latest payrolls data, price strength has again materialised from the uptrend support, to post new all-time highs at 21512 on December 4th.
While the uptrend, currently at 20849 within today’s price activity, has been confirmed as a possible support focus, equally important is today’s potential resistance level, standing at 21687. This is the upper trendline connecting the highs dating back to August 1st.
So, the levels we may want to watch over the data release are in place, and while it is important to note that closing breaks of these are no guarantee of future price movement, a confirmed breach of support or resistance may result in further price movement in the direction of the break, but this is very much dependant of future price trends.
What are potential resistance levels if 21687 gives way on a closing basis?
Closes above the 21687 trendline resistance would again see new all-time highs posted, so, we can then turn to Fibonacci extension levels to help provide areas of interest where there may be potential for sellers to be encountered.
Using the July 11th to August 5th last sell-off as the measure, the 38.2% extension stands at 22151, and 61.8% point at 23010. Just because trendline resistance breaks have in the past resulted in further price strength is no guarantee it will do so again, but if strength does develop after payrolls and 21687 is breached, these levels could be areas where upside momentum may slow, or even be held.
And Supports?
As we have said earlier, the 20849 uptrend is potentially the first support focus within any negative reaction to the data and closing breaks maybe the catalyst for further price declines.
If such moves do materialise, it's possible it may trigger further price weakness, with the 20309 November 19th low next possible support. If this in turn gives way, it might prompt tests of 19887/19904 support, a combination of November 4th session low and 38.2% Fibonacci retracement of the August/December strength.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
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