There could be a lot of volatility today as we have Fed interest rate decision scheduled in the NY session. So, I would prefer trading crosses like AUDNZD. There is a very interesting buy opportunity developing for AUDNZD as the pair is holding the uptrend channel support as shown in the 4 hour chart below. In my opinion, pair can consolidate for some time before moving up again.
There is a down-move trend line as plotted on the 4 hour chart below. In order to jump into a buy trade, I want the pair to break this particular trend line and resistance at around 1.1420. If the pair breaks and closes above the trend line and resistance, then it would be the right time to enter into a trade. Alternatively, if the pair drops further and stops again at around the channel support, then we would look to buy with a bullish candle pattern on the 1 hour chart and divergence on the 4 hour chart. Initial target should be around 1.1550 and final target could be the last high at around 1.1620. Stop should be placed below the previous low in the first case and below channel support in the second case.
Reviewing yesterday’s events and trades
US Inflation data was released yesterday, and for August, CPI was measured at 1.5% versus the expectations of 1.6%. NAHB Housing market index too dropped to 58 versus the expectations of 59. Overall data was US dollar negative, and thus USD fell initially but later recovered some ground. German ZEW economic sentiment jumped to 49.6, which boosted the Euro against all the major currencies. UK inflation data was in line with the expectations, which left GBPUSD inside a 30 pip range.
Fundamental Outlook for the day
Today is an important day as Fed interest rate decision is lined up later in the NY session, and Fed Chairman Ben Bernanke will also be speaking after the release. Investors have been waiting patiently for this particular event as to know more about fed reducing the asset purchases. Market is expecting asset purchases to be reduced by USD 5-10B. Any surprise on either side may trigger some heavy moves in the market. I expect some substantial volatility around this particular event, and if you are not sure, then please stay away from the market today as it may turn out be a game changer for US dollar.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: GBPUSD, NZDUSD, EURNZD, GBPCHF, GOLD, SILVER and DOW JONES.
Get it HERE: Vladimir’s Markets Forecast
Trade very carefully friends. Happy trading!
