Strong U.S. Dollar, Weak JPY And CHF, Bullish Equities – Main Themes In March 2021

Tomorrow starts the OPEC+ meeting, and on Friday, the U.S. Non-Farm Payrolls will reveal the jobs created in March. That is the most important event because there is a bank holiday in the United States due to the Good Friday holiday.

As such, whatever the market reaction will be to today’s private payroll numbers, traders will take it with a grain of salt and would rather wait for the NFP to confirm the report. The forecast is that the private payrolls will add 557k, but the risk is that more jobs were created due to the ongoing economic recovery taking place in the United States and the fiscal stimulus released this month.

Markets to Watch

Dow Jones, AUDUSD, S&P 500 – markets in focus today.

Dow Jones

Dow Jones has spent the last four months in a rising wedge, a reversal pattern typically forming at the end of bullish trends. However, there is one other situation where a rising wedge acts as a continuation and not like a reversal pattern – a running triangle.

According to the Elliott Waves theory, a running triangle forms ahead of the longest wave in a five-wave sequence. More precisely, a running triangle typically appears as the third wave in an impulsive structure.

Because of the fact that the price action looks like a rising wedge, the pattern attracts short interest. This is what makes the price action in the opposite direction to be extremely violent, tripping stops.

Dow Jones is reluctant here, and the news that President Biden is about to announce a new stimulus package designed to improve the American infrastructure can only help the equity market.

AUDUSD

One month ago, just a few days ahead of the end of February, the Nasdaq100 index corrected and triggered a move higher in the dollar. The AUDUSD pair was especially hit, dropping from 0.80.

On its way lower, the pair broke out of a rising wedge pattern; it retested it twice and then went for the first target – the 38.2% retracement. Since then, it did nothing else but consolidated in what appears to be a continuation pattern. Unless the market reverses back above 0.7750, the bias remains bearish, with the 50% retracement level the next logical target to watch.

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Disclaimer: None of the content in this article should be viewed as investment advice or a recommendation to buy or sell. Past performance/statistics may not necessarily reflect future ...

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