I’m looking at another potential forex trend play this week with AUD/USD’s rising channel setup. Think I should take this one?
On the pair’s 1-hour time frame, I’m seeing this simple pullback play to the bottom of the channel. That support area is somewhere between the 50% and 61.8% Fibonacci retracement levels, which might be strong enough to keep losses in check.
I’m looking at a potential buy area around the .7650 minor psychological mark, which is also right around the previous week low. However, I’m holding back because I’ve already got a long NZD/USD position open from last week and I’m worried about additional volatility during the FOMC statement.
While I doubt that the Fed would announce any tightening moves this week as U.S. data (PPI, retail sales, CPI) have been disappointing, I’m also considering the possibility that FOMC members might sound upbeat and set expectations up for a June hike. Fed Chairperson Yellen did say that they’re making good progress in aiming for their inflation targets while other FOMC policymakers have been highlighting the green shoots in the economy.
Because I’m not that confident with this setup just yet, I’ll refrain from putting any actual orders ahead of the event risks. I’ll still keep a close watch on the channel support and wait for reversal candlesticks around my buy area towards the end of the week, though. In the meantime, don’t forget to check out our risk disclosure and follow me on my social media accounts for updates!
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