With clear levels to trade, this Wednesday’s FOMC is the most likely trigger for EURUSD breakout.
Get all the details and see exactly how I’m trading it in today’s video.
The EURUSD looks set to break out this week on the back of Wednesday’s FOMC.
The question is, which direction?
We previously discussed how the euro broke the 2008 descending trend line on March 3rd and also tested multi-decade support at 1.0850.
At some point, and likely soon, EURUSD will have to decide.
Either get back above the 2008 trend line at 1.1080 to confirm the false break or close below multi-decade support near 1.0850.
And there’s an excellent chance that this Wednesday’s FOMC triggers one of these outcomes.
In the meantime, I think trading EURUSD will remain challenging.
I won’t be trading until after the dust settles from Wednesday’s events. Attempting to trade leading up to or during Fed rate decisions is ill-advised, in my experience.
It’s an unpopular opinion, but I would rather see the euro get back above the 2008 trend line as it would present a more straightforward trade.
The difficulty with shorting EURUSD below 1.0850 is the March 2020 low near 1.0650. That doesn’t leave much room for error.
There’s also the issue of shorting a market that’s down 1,300 pips since last May and 540 pips since February.
Relief rallies from a market down that much will be intense. Look no further than March 9th.
I’m prepared to trade either scenario, but not until we have a confirmed close above 1.1080 or below 1.0850.
A close above 1.1080 would expose 1.1480, while a close below the 1.0850 region would open up 1.0650.