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Markets Close Day Flat, Waiting For FOMC Wednesday OCT. 28, 2014

Equities and Currencies waiting on Fed Meeting Tomorrow

For the most part all markets yesterday were slow as the big boys play it safe before the FOMC Meeting tomorrow. It will likely be the same way today since no one wants to stick their neck out before hand. Therefore any trade I take today I will also want to be on the safe side and take profits at the twice my risk mark.

The issue at stake is whether or not the Fed actually ends the QE program. Personally I think they dont have much choice but to end it for now anyway. Yes I also think they will have to restart in the future but there are a lot of risks associated concerning all the damage they have done to the USD already. They are essentially standing on a double edged sword and could go either way. Either tell Wall Street to go suck a duck and let them fall or appease them once again and kick the can one last time. I say one last time because QE is all the Fed has in its tool box right now. If they cant at least raise rates a little they only have the printing press to try and work through the next recession. Of which is almost guaranteed considering the so called recovery has never really gained any speed. In short the Fed needs to try and add some tools to their bag. Yes I fully expect that Wall Street will test their resolve in coming weeks or months but the question is, how much will the Fed let the markets crash before they step in.

I cant tell you how happy I would be if proven wrong and somehow growth remains without the Feds punch bowl but I am not holding my breath on it.

EUR/USD Analysis

The EUR/USD did see a small push to the upside yesterday turning at the Friday close price then pulling back to Fridays highs only up a 20 pips on the day. The range was a mere 57 pips showing that even though the USD was weaker they weren’t going to commit to a direction this close to such an important Fed meeting. At this point with all things considered the higher probability is for a move up but I dont expect much more than a 50-60 pip range again today. The best level to trade long from are yesterdays lows at 1.2665. The current Asian lows are valid as well but do carry more risk. The reason is due to the lack of direction along with it being closer to the middle of yesterdays range. However it does have the confluence with Fridays high and yesterdays close making the risk slightly less than it would not having the confluence. The safest short would be from a stop run to yesterdays highs but the 1.2713 is a little stronger just below.

EUR/USD 1hr chart

GBP/USD Weak Second Push

The GBP/USD tried to make the second push yesterday but fell short of even running 90 pips so I wont be counting it with much weight. However they did run short intraday pushes on the last move down so its entirely possible if not probable they are doing the same here to the upside. I will have a small bias for the long and prefer to trade this pair today during London since it is more clear than the EU. The best level for the long is 1.6107 but if they push up during Asia I will consider the Asian lows just above. I will be cautious since they could also push it lower to 1.6094 before a move up. The best level to short will be at yesterdays highs but if price gets there I prefer to be long already and waiting for a break to the upside.

GBP/USD 1hr chart

EUR/JPY Holds Range Between hourly and four hour 200 EMAs

The chop on the EUR/JPY yesterday is indicative of the big boys not wanting to commit on risk in either direction. With price sandwiched between the hourly and four hour 200 EMAs this range has a good chance of holding today considering the FOMC tomorrow. At this point the levels haven’t changed so I will be looking for the short at 137.22 this morning and London as long as it holds. Otherwise if they do run it down without me I will consider the long from the lows of 136.57. On a side note there was a nice set up during London for the long yesterday. Good job to those that caught it even though it took until this morning to get the 40 pip profit without the perfect entry.

EUR/JPY 1hr chart


Forex News Today

The calendar today is slow during the London session so they will likely make a move during Asia or NY today. Once NY opens there is US Durable Goods data. With the recent mix in the housing releases its hard to say what is most probable here. I am thinking it to be close to the expected figures but with the large move expected on the monthly figures a miss there has a better chance. Otherwise it wont cause much movement due to the Fed tomorrow. Later is CB Consumer confidence expected to rise as well and if it does could be positive for the USD but again will need a big miss in order to get them moving before tomorrow and will likely pull back most of the move later.

Asian session traders need to keep an eye on Japanese Industrial Production tomorrow but that’s about it.

Happy Trading



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