FOMC Brought Us Few Great Trading OccasionsYesterday evening we found out that we should not expect any interest rate rises in 2020, which of course was a rather negative information for the American Dollar.
For majority of the traders it was not a surprise. First of all, that was the recent trend for Dollar and what is more, the first reaction after the FOMC was not too volatile. Despite the limited response for the FOMC in terms of the pips, we still got few nice, significant trading signals.
We start with the main pair – EUR/USD, where the technical situation finally looks really promising. Yesterday, the pair managed to break two important resistances. The first one was the neckline (blue) of the nice inverse head and shoulders pattern and the second one was the long-term down trendline (red). First step towards a major buy signal was made, now it is time for the buyers to hold above those lines and testing them as valid supports. Once the price will establish a strong position above those two, the buy signal will be created.
Second one is the USD/MXN, which we also mentioned yesterday. We pointed out at a rising bearish pressure and the willingness for a breakout of the lower line of the symmetric triangle pattern. We did not have to wait a long time for that. FOMC driven movement managed to break the crucial support, giving us a major sell signal.
Last one is the NZD/USD, which finally reached the crucial long-term resistance (red), that we mentioned in one of our previous analysis. Back then, we anticipated that the price will get there and Kiwi did not disappoint us in this case. Red line is a great place to start a proper downswing but price action traders do not take that for granted. Price action traders wait for the situation to develop. Price closing a day above the red line will be a major buy signal and the price creating a bearish reversal pattern and closing a day below the Wednesday’s lows will be a signal to go short.
This article is written by Tomasz Wisniewski, Director of Research and Education at Axiory