FX: many pairs in narrow ranges ahead of FOMC by Mary McNamara

There has been some profit taking on USD long positions ahead of FOMC and the USDX is still trading below last week’s high. Some mixed US data overnight has not helped the long USD trade either. The EURX is still trading higher but this balance will most likely shift after tonight’s FOMC. Liquidity has dried up on many currency pairs ahead of FOMC and Bollinger band action gives a clear visual indication of this.

USDX 4hr: lower ahead of FOMC. Note the Bollinger band squeeze here as well:

EURX 4hr: trying to put in a bounce:

EURX monthly: I’m still not giving up on the inverse H&S just yet:

S&P500 30 min: the earning miss on big cap Caterpillar and perceived weak results for Microsoft took its toll on market sentiment during the European and US sessions. There was a great 30 min trend trade to ‘short’ here though for those who can trade during the US session.

S&P500 daily: the bigger picture is still unclear here with the index ranging within a triangle although still above the daily Cloud. The huge beat by Apple after today’s market close may help to lift overall sentiment but FOMC will probably weigh on traders during the next US session. FOMC is only announced 2 hrs before the US markets close and there isn’t a Press Conference with this release:

Silver and Gold: both of these got a boost with ‘flight to safety’ activity following this earnings concern and USD weakness:

Silver: a bit higher and hovering near $18:

Gold: still below the key $1,300 level but we haven’t had any dip to test $1,250 yet. This looks like it might be setting up in a Bull Flag now and so I’d be watching for any trend line break following FOMC:

Forex: I don’t have any new TC signals and I wouldn’t be expecting any anyway given the choppy action we’ve seen leading into FOMC. Note the Bollinger bands on may pairs though; the clamping down action signals reduced liquidity whilst the markets wait for the big news! Let’s just hope this FOMC news clarifies the US rate increase schedule; one way or the other.

I do tend to find that when the markets are jittery and choppy ahead of a major news release then the 30 min charts during the US session will sometimes turn up decent shorter-term trend trading opportunities. This has been the case again overnight with the S&P500 and Cable.

E/U: enjoying a bit of a bounce on the back of some recent USD weakness BUT note the Bollinger bands here:

E/J: ditto here:

U/J daily Cloud: I had said to expect choppiness whilst price was stuck in the daily Cloud and that is what we’ve had for the last couple of weeks now. It’s not rocket Science here but pure observation.

U/J daily: much like the S&P500, ranging within a daily chart triangle:

U/J 4hr: Note the impact of the key 118.5 level:

A/U: holding near major Fib level support ahead of today’s AUD CPI.

A/U 4hr: note the Bollinger bands here!

Cable: there was weak data overnight but hawkish comments from the BoE Govenor helped to lift this pair. Note how US traders could have made a decent long trade off 30 min charts during the US session:

G/U 4hr: price is back above the major monthly chart trend line. I mentioned in my w/e write up that if the monthly candle close, due at the end of this week, was to finish above this major trend line then that would be a bullish signal on this pair. We’ve a few days left to go here though:

G/U 30 min: an easy low risk/high reward trade possible during the US session:

Kiwi: this isn’t doing too much ahead of the two big news events due out here in the next 24 hrs. That being FOMC closely followed by the RBNZ interest rate announcement. Note the Bollinger bands here too: