NFP Trading tips & tricks

1 April, STO, Limassol - The last week of March has been pretty spectacular from volatility point of view despite Easter Trading. As the month and Q1 came to their end, 1st of April NFP day has a special value as traders impatiently look for the NFP results since it is the last employment data related trading opportunity of the Q1.

So, if you too are wondering about how to trade NFP figures, keep on reading as we will cover market expectations as well as special tips for today’s big data.

Overall, a typical NFP day is generally divided into three parts and each part has its own significance:

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  • Pre-NFP announcement
  • NFP Announcement
  • Post-NFP announcement

Pre-NFP trading hours are generally known for their mini price action developments where market often trades calmly according to technical analysis, support and resistance level. This move continues up to 3 minutes before the NFP data announcement.

Meanwhile NFP announcement period of the day lasts generally 10-30 minutes and it resembles clash of titans, where the frequent trading set-ups as well as news trading algorithms create major volatility in the market. Towards the end of this short trading period, market tend to move according to minutely moving averages slopes and can be like a heaven for scalpers.

Post-NFP trading period comes approximately 25 minutes after the actual data announcement and is known for its illogical market move. Sometimes you would see that the data has been negative, hence the USD would start depreciating right after the data announcement but after 25 minutes you would see the USD appreciating and the trend reverses completely. The reason behind such market developments often hide between the figures, since the NFP announcement does not just cover one data, but multiple employment related data and where investors would need to look into and make sense out of the following major numerical announcements to understand the Real US employment rate:

  • Actual NFP data
  • Average hourly earnings
  • Unemployment figure
  • Average participation ratio
  • Average weekly working hours

Let’s imagine that the NFP data came positive beating expectations, but average hourly earnings and average weekly working hours fell compared to the previous month, how would the market react to it? Firstly such data would create a choppy market environment, thus you would first see the USD appreciating, due to the NFP figures, but then the USD would depreciate as investors would start realizing that the new employment opportunities created were at the cost of cutting the existing employees working hours and wages (bad for the USD). Hence, during the post-NFP announcement phase the USD would be depreciating.

NFP support and resistance levels

EURUSD: Weaker USD due to Janet Yellen’s market disappointment has so far given wings to EURUSD. The pair has its immediate resistance at 1.1410 level with the consecutive resistance levels at 1.1500 as well as 1.1580 levels. Meanwhile, key support levels can be seen at 1.1360, 1.1310 and 1.1260 levels.

USDJPY: Ahead of the NFP, USDJPY is moving on a bullish correction path; however bear in mind this move could be misleading. Key resistance areas for USDJPY are 112.60, 113.00 and 113.80. Meanwhile, key support areas for this pair are 112.20, 111.55 and 110.95.

DEMUSD: Despite the European refugee crisis and Belgium explosions the DEM appreciated over its counterpart, mostly due to Janet Yellen’s US economy commentary. The pair gave 700 pips profit opportunity rising from 0.5220 zone to 0.5940 level. The pair has its immediate resistance at 0.6010 level which is also a psychological resistance level. From 0.6010 level bearish pressure could get strengthen and the pair could be pushed back to its 0.5555 support zone, which is 455 pips NFP trading opportunity in just one pair.

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