Good morning readers – hope you all had a good weekend.
I noted on Friday that the compressing triangle formation would break at some point and it did just that ostensibly after some poor PMI (purchasing managers index) data for France and Germany. However it left the November lows of 1.1214 in place and came back to close at around 1.13. Those lows might be tested on Wednesday with the release of the FOMC rate decision.
There is nothing of note on the data slate until then so watch the charts at or around the levels posted and trade long or short preferably after you´ve also checked the price action on the lower time frame charts. I know this may sound a little glib especially when you read other traders views which invariably sound much more certain in their analysis and directional bias.
But, basically what I do is really straightforward – I don´t get wedded to any particular direction and I always try and keep it simple!
Sure, there are times when it looks clearer to me on the charts whether we should be looking to go long or short but much of the time I don´t know, especially with regard top day trades. In which case its a matter of watching the price action, planning where you expect the probability of a trade to be in your favour in either direction (levels and price ranges) and trading.
So what are we looking at for today.
The Daily Chart
As mentioned above the key level that stands out is the November low roughly in line with the 61.8 Fib level. Whether we stay below 1.13 or trade back higher is likely key to whether this level will be tested this week probably on Wednesday with the FOMC.
The Hourly Chart
As I am writing this on Sunday prior to the open the levels look clear enough. Wait for the market to get going Monday morning (don´t be too hasty – let things unwind first) and trade what you see around these levels.
Have a good one :).