The 240 minute EUR/USD Forex chart sold off after the Japan announcement last night, but reversed up from the exact bottom of the 3 week trading range. It is therefore still in breakout mode going into today’s FOMC announcement.
The EUR/USD Forex market is in breakout mode going into today’s 11 a.m. PST FOMC announcement. It is in a 3 week trading range at the apex of a 6 month range, in the middle of an 18 month range. The 5 minute chart will probably be sideways going into the report, and day traders will probably mostly scalp with limit orders.
The direction of the breakout is independent of the report. The market believes the Fed will raise interest rates now of soon. What traders do not know is whether more money will buy or sell the EUR/USD after the report.
Because the 1st breakout after the report fails more than 50% of the time, day traders should wait at least 10 minutes after the report before taking a trade. If there is a big breakout, there is a 50% chance of a trend into the end of the session. There is also a 50% chance that the trend will stall or reverse after an hour or so. Day traders should be open to anything, and they should try to swing trade.
Overnight EUR/USD Forex sessions
While the EUR/USD Forex market sold off after the Japan announcement last night, it reversed up and formed a double bottom with the August 31 low. It is still in the apex of nested trading ranges. Hence, it is still in breakout mode going into today’s FOMC report. It has been in a 20 pip range for 4 hours. Yet, day traders are ready for a breakout at 11 a.m. PST.