Waiting for the FOMC
Skerdian Meta • 2 min read
Yesterday was a really good day for us. We picked the top on EUR/USD and opened a couple of sell signals there, so our analysis about this pair on yesterday´s post was spot on. We also had two other winning signals on USD/JPY and AUD/USD, but I´m beating myself up for missing the big down move on GBP/USD. We had placed a pending sell signal on this pair at 1.4850 which was the top of the previous day, but the price missed it by 5 pips before falling more than 120 pips. I can´t complain though, as we closed the day with a 120 pip profit.
Today we have the FOMC statement at 18:00 GMT and the FOMC press conference 30 minutes later. So, you might be wondering what´s our plan for today. In such events, there are two periods to trade, the “before the statement” period and the “after the statement” period. The market is usually anxious during the hours leading to the statement and there´s no clear direction or trend. The price tends to trade in a narrow range, so will try to play that range today, especially on EUR/USD. 1.0649 was the high on this pair yesterday, give or take one pip. Today looks similar to yesterday and we don´t see a clear attempt to break yesterday´s high, so we will open a sell signal if it gets to 1.0630-40 area before the FOMC statement. We´ll consider opening a buy signal on USD/JPY around 121.00-05 because this level has acted as resistance in the last four trading days and the 100 smooth MA just reached this area.
The period after the statement is a different story and a more complicated one to trade. There´s a rumor that the FED is going to drop the word “patience” from the statement and open the way for a possible rate hike in July. If that happens the Buck will rally and we´ll try to sell the Euro and the Pound against the USD at whatever price they at that moment. But the cold weather has hindered the US economy during February and the data hasn´t been great, so that might force the FED to push the rate hike further ahead. In that case, the USD will get smashed and we´ll try to buy EUR/USD if we can be fast enough to get in the market.