U.S. Jobless claims

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week.

Last week’s number was 206K which was higher than the forecast of 200K. Jobless claims increased by 18,000 last week, despite the U.S. economy’s recovery from the pandemic. The government’s aid in terms of unemployment benefits helped restore the economy, however, the job market is still short of 3.9 million jobs from where it was in February 2020.

Investors and traders will be keen to see the latest report as it impacts the strength of the U.S. dollar. A weaker number could be bearish for the dollar, and a higher-than-expected number could mean a bullish dollar.

The report is due Thursday, 23 December at 13:30 GMT.

US100 Technical analysis – Daily time frame

Analyzing the overall trend is the most crucial step in trading. Traders can use any strategy to do it. One of the best ways is to apply a 200 moving average in the chart or use any indicator that does the same.

Moving Average (M.A.)

The market is in a consolidation phase, with the 200-moving average acting as support for the price from below, signifying the market movement on the upside.

Relative Strength Index (RSI)

We apply RSI to check for overbought, oversold, or divergence on the higher time frame. The RSI was close to the 30 zones; therefore, no clear direction in price.  

Technical Analysis using Price Action:

From the Daily time frame, if we zoom into the consolidation area, US100 declined significantly at the start of the trading week and touched the 15,500 level. However, it was unable to break below and is in an uptrend currently.

Since we are close to the end of the year, the lack of liquidity might mean that the market will remain in this consolidation phase until early January. Adding to this is the new Omicron variant, which investors are unsure of. Therefore, the stock market has been on a decline.

If the price breaks below 15,500, it might move down towards the 15,000 level.

Potential pivot points using Price Action:

Resistance Pivot		Support Pivot
R1	15,879.33	S1	15,733.43
R2	15,971.47	S2	15,679.67
R3	16,117.37	S3	15,533.77

This considerable resistance and support level can enter or exit when approaching future market openings.

US100 Technical Analysis – 4Hour Time Frame

Looking at the 4-Hr time frame for possible trade entries, we can see that the 200-EMA crossed the 50-EMA on 9 December in an upward direction.

Although the price broke above the cross, it continued down to the support level of 15,500 zones.

Because the price is in a consolidation phase, we cannot rely on the golden cross for a sell or buy direction and can only use this strategy once the price has broken out of the consolidation.

The market is now moving upward, and we might not see a breakout of this zone before the end of 2021. The current uptrend might reach 16,500, and a buy would only be considered once the price breaks above this level.

Key Trading Recommendation

Stock indices are highly risky to trade, especially US100 since it tracks the performance of the top 100 tech companies. These stocks are often volatile, and prices can fluctuate significantly.

The best approach would be to day-trade the smaller movements in the consolidation phase with proper risk management.

Furthermore, the U.S. jobless claims will impact investors’ sentiment as it indicates the unemployment condition in the country and the overall growth of the job market.