With the highly anticipated FOMC meeting coming up, I’m staying in watch mode this week, with my eyes set on AUD/USD.
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AUD/USD has been beaten up for weeks thanks to the global fear trade brought on by China’s falling financial markets in August, so it makes sense that we’re finally seeing a bounce higher starting last week. The pair has bounced over 200 pips since bottoming last week, but I’m sure that there may be a little more ways to go before the short covering runs out of steam. After all, the pair was trading around .8000 at the beginning of the year.
Plus, we’ve got the most highly anticipated event of the quarter, if not the year, in the form of the FOMC monetary policy decision. It’s likely we won’t see a rate hike, and if we don’t, then forex trader will hinge their next USD moves on the tone of the Fed and their outlook on the economy. This event should bring in more Greenback sellers in the short-term if they don’t raise rates, but if the tone is bullish on the U.S. economy and price action confirms that traders aren’t ready to abandon the Dollar just yet, that’s when I’ll look to short this pair to play the global theme of emerging market weakness and a strengthening U.S. economy.
The .7200 – .7500 is my potential short entry area, so I’ll be on the look out for now and wait to see what the Fed says and how the market reacts. Stay tuned for my next move by following me on Twitter and Facebook!
Finally, EUR/NZD is slowly creeping up above that strong resistance area I pointed out in my last forex watchlist post, so I may make a move there soon if we get a confirmation that traders are ready to take that market higher.