Euro Dollar and the Fed Monetary Policy Meeting

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EURUSD Trading Strategy

We have repeatedly mentioned that the US Dollar (USD) is likely to be sold in the Forex market as a result of the FOMC statement and economic projections that are due on Thursday. Today’s heavy USD selling was as a result of traders adjusting their positions ahead of the Fed monetary policy meeting. There is a 30% chance a rate hike will be seen tomorrow while we believe the Fed is unlikely to act and should the economic projections will be revised lower the US Dollar may be heavily sold. The Fed favours a weak currency as it often boosts the exports sector. The most difficult part of the strategy is entering the market after the dollar was sold.  Doing so often means incurring an immediate drawdown. We must therefore highlight this is a fairly risky trade that is dependent on the outcome of the Fed monetary policy meeting.

EURUSD 60min Chart

Please click on the chart to enlarge:

EURUSD 60min Chart 16/09/15

EURUSD 60min Chart 16/09/15

Under regular circumstances we would not have gone for a long trade in EURUSD. However, we are fairly confident the Fed will not act. The break outside the channel suggests further gains on the hourly chart, combined with the reversed H&S on the daily chart. In order to minimize our exposure we opting for an hourly stop where we do not allow the price to substantially retrace lower. EURUSD may correct towards 1.1258, which is expected to hold. This enables us with a very tight stop while using the daily chart to determine the take profit. The risk to the trade alert is that the price will opt for a deeper retracement towards 1.1215. We are not setting the stop below 1.1215 as we suspect the gains will continue throughout the Asian session.

EURUSD Trade Alert Details

EURUSD long at market price (1.1290)
Take profit: 1.1580
Protective stop: 1.1220
Risk Ratio (RR): 1 : 4 (approx.)
Estimate duration: 7 days

Although the estimated duration is 7 days we do not wish to roll the trade over into the weekend.

17/09/15 UPDATE: EURUSD is trading at 1.1320  at the time of this writing.

Please click on the chart to enlarge:

EURUSD 60min Chart 18/09/15

EURUSD 60min Chart 17/09/15

We are closing 20% of the long trade at market price.

17/09/15 UPDATE II: EURUSD is trading at  1.1382.

Please click on the chart to enlarge:

EURUSD 60min Chart II 17/09/15

EURUSD 60min Chart II 17/09/15

we are closing 30% of the long trade and shift the protective stop to the entry ahead of Yellen live conference.

17/09/15 UPDATE III: EURUSD is trading at 1.1390 at the time of this writing. We have already liquidated enough partials off the long trade. We are shifting the protective stop to 1.1310. Unless an unexpected event takes place we are planning to close the trade ahead of the weekend.

17/09/15 UPDATE IV: EURUSD is trading at 1.1421.

Please click on the chart to enlarge:

EURUSD 60min Chart III 17/09/15

EURUSD 60min Chart III 17/09/15

We are closing 10% of the long trade at market price.

18/09/15 UPDATE: EURUSD is trading at  1.1432 at the time of this writing. We noted the reversal pattern that was painted on the hourly chart.

Please click on the chart to enlarge:

EURUSD 60min Chart 18/09/15

EURUSD 60min Chart 18/09/15

Although this is insufficient for providing as short entry it is a distinct warning sign. We are therefore closing the remaining part of EURUSD at market price and finish the trade with a decent profit.

Euro Dollar and the Fed Monetary Policy Meeting

As EURUSD long trade is closed this page can  now be accessed by all traders. Open trades are restricted to members only. We have been providing trade alerts in the Forex market since May 2014.
Euro Dollar and the Fed Monetary Policy Meeting

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Euro Dollar and the Fed Monetary Policy Meeting

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Euro Dollar and the Fed Monetary Policy Meeting