Pre-FOMC FX Analysis

Hello Forex Traders,

Be aware that the Forex market could see limited price movements today and tomorrow due to FOMC’s statement, economic projections and press conference on Wednesday at 2-2.30pm EST. The main reason is that market participants are awaiting more information from this event for the future direction of the FED’s policies.

With this cautionary warning clearly stated, let us take a look at the charts and see what interesting setups our technical analysis is providing. Let us start off with the USDJPY, as it is a typical currency pair which usually is heavily impacted by a FOMC statement.

18- 3- 2014 uj 4

USDJPY

The USDJPY is building a consolidation zone when viewing a 4 hour chart. The choppiness has a hint of downtrend connected to it as price retraced from +/-105 to 101. The corrective downside however was not sufficient to change the trend into bearish territory as our Double Trend Trap (DTT) indicator remains grey and neutral – both for the 4 hour and daily chart. Traders looking to trade trends would therefore be well advised to avoid trading the UJ.

From a discretionary point of view, we are able to see that price is neatly captured by a support and a resistance trend line (orange). [tweetable alt=””]A break of one of these two lines could translate into the end of the range and the start of trend.[/tweetable]

If a break to the downside occurs, price could fall to the next Fibonacci retracement level which is the 61.8% Fib at 100 (also an important psychological round number of course).

If a break to the upside occurs, price could rise to the next trend line resistance (magenta) which is a heavy resistance level from monthly chart.

18- 3- 2014 uj d

USDCAD

The Loonie is also consolidating at the moment as the DTT trend indicator is currently showing grey / neutral. Also when us technical analysts put trend lines on the tops and bottoms, there is a clear chart pattern visible: the contracting triangle.

Price will need to break out of this consolidation pattern before bigger movements could be expected:

1)      The upside break would without doubts be a with-the-trend break out.

2)      The downside break would indicate a higher likelihood of a bigger correction unfolding.

Please take a look at the screenshot to see where the (first) targets could be expected.

18- 3- 2014 uc

AUDUSD

The Aussie bounced with lots of momentum off of the 88.6% Fiboncci retracement level (green). Although the bounce was strong, price so far has failed to break above the top and price actually stopped at the opposite 88.6% Fibonacci retracement level (red).

Here too caution is needed before trading this currency pair. Although there is strong momentum, the momentum is in fact visible to both sides. Tha AUDUSD is now lacking a trend (DTT indicator is part grey), and the pair is building a consolidation zone (trend lines). There could be interesting range trades within this consolidation, but a trend continuation can only be expected above or below it.

18- 3- 2014 au

What do you think of the USDJPY, AUDUSD and USDCAD? Let us know down below in the comments section! Looking forward to your opinion and feedback!

Thank you for sharing this article via social media and other methods! Wish you all Good Trading this week!

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