Learn How To Trade – Trapped Traders® Daily Analysis – How To Trade FOMC

Share it with your friends Like

Thanks! Share it with your friends!


Get Mark Chapman’s Free Trapped Traders Calls and Learn How To Trade – Click here:

A sunny day. Warm day here in the UK, and it’s also FOMC interest rate decision day. The fed likely to raise interest rates, again, this evening. Even though the jobs data has been a little bit soft recently, it’s still widely expected to go ahead and continue the rate hiking cycle.

And I just want to point your attention to this particular chart, but you can bear this in mind for any type of future rate decision. You want to never sort of be in a position where imagine that the dollar was strengthening against a currency and it’d been moving down in the case of the NZDUSD, so the USD is getting stronger against the NZD. And you have like a really strong move and then you have the interest rate decision that is positive USD.

Now, on balance, the potential for further downside is kind of reduced. The more likely occurrence is that that’s going to sort of buy the rumor, sell the fact. It’s going to reverse against those positions. There’s not really the potential for a trade when there’s already strength in the currency going into a risk event like this. Now, contrast that with this example, where you’ve got massive USD weakness, and this is a daily chart for several weeks in a particular pair. Now, what this provides is this image provides the potential for USD strength and there’s plenty of opportunity with a chart like this.

Now, obviously you have to wait and see what the data is when it comes out, but I’m just highlighting the type of situation where trading these risk events can be more advantageous when you’ve had weakness of the said currency going into a risk event. There’s much more opportunity for the USD to strengthen and for it to gain, or against. Contrasting that, I know it’s the other way around, but imagine this was the USD going into the FOMC. Is it really going to go that much further if they raises interest rates? No, it’s unlikely, right? The price doesn’t continue in straight lines for very long.

It’s much more likely price will reverse. So, just bear that in mind. It’s just a tape. It’s a bit of a playbook for how you can approach the data later this afternoon. Don’t go into USD trades where the USD is already strengthened. Look at any particular chart where you see there’s been continuous USD weakness. Those are the charts where there’s a potential opportunity.

This video is for general information only and is not intended to provide trading or investment advice or personal recommendations. Any information relating to past performance of an investment does not necessarily guarantee future performance. Forex Traders Daily including its analysts shall not be responsible for any loss that you incur, either directly or indirectly, arising from any investment based on any information in this video. Please remember derivatives and FX spot carries significant risks and may not be suitable for all investors. Losses can exceed your deposits.


Comments are disabled for this post.