Today's FOMC outcome will rattle the markets, it's just we don't know which way! But even if we don't know the outcome of the directional moves, we can still trade it and extract few pips from that. The answer of how we can do that is, by identifying good support and resistance levels to trade against. From these levels, price can at least bounce for few pips and if you are good at position sizing then if these levels indeed hold, you can have your BIG FOMC trade ! So let's identify important support / resistance levels for few major pairs.
EUR/USD - Before FOMC we would like to trade around 1.1280. Then we are looking for 1.1400 & 1.1600 on top side and 1.1060 for downside support. Well, we know that there is lot between this wide range but during such big events you need to keep your levels in such a way that they are at the extreme of any side. Which ensures that even if you are wrong in long term, you can make money on quick short term trades.
GBP/USD - May be today's outcome can decide whether pound will breach the existing range of 1.4000 - 1.4500 and move into another 500 pip range of 1.4500 - 1.5000 or slip back. Let's forget top side of 1.5000 for a moment because we just don't want to short it from any other level than that and may be today's event may not have enough power to push it to such extreme. Pound has already moved much higher, so possibilities are for testing downside supports. We are looking for 1.4450 / 1.4400 first and then 1.4250 next.
Our EUR/AUD short has been closed after ECB decision last week and after today's Australian CPI surprise rest of the position was closed. But it was good trade giving us roughly 600 pips. We are still long GBP/NZD ( with another +500 pips gain ) and may close it today before FOMC.
EUR/USD - Before FOMC we would like to trade around 1.1280. Then we are looking for 1.1400 & 1.1600 on top side and 1.1060 for downside support. Well, we know that there is lot between this wide range but during such big events you need to keep your levels in such a way that they are at the extreme of any side. Which ensures that even if you are wrong in long term, you can make money on quick short term trades.
GBP/USD - May be today's outcome can decide whether pound will breach the existing range of 1.4000 - 1.4500 and move into another 500 pip range of 1.4500 - 1.5000 or slip back. Let's forget top side of 1.5000 for a moment because we just don't want to short it from any other level than that and may be today's event may not have enough power to push it to such extreme. Pound has already moved much higher, so possibilities are for testing downside supports. We are looking for 1.4450 / 1.4400 first and then 1.4250 next.
Our EUR/AUD short has been closed after ECB decision last week and after today's Australian CPI surprise rest of the position was closed. But it was good trade giving us roughly 600 pips. We are still long GBP/NZD ( with another +500 pips gain ) and may close it today before FOMC.
