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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.
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EURUSD bulls broke a significant resistance area last Thursday. I’ve mentioned the 1.1700/20 region a few times in the last couple of weeks as it’s the location of several highs going back to mid-July. You can even see how 1.1720 served as a pivot in May and June.
It only makes sense then that the area would attract buyers this week. That’s what I wrote on Sunday, and that’s what we’ve seen happen so far this week.
However, the single currency faces a critical test today. The Fed rate decision at 2 pm EST followed by the press conference at 2:30 pm EST will no doubt test buyers’ resolve.
Events like FOMC have a way of making or breaking a directional bias. So, if you’re bullish the EURUSD, you may not be by the end of today. Alternatively, today’s events could strengthen your bullish outlook for the Euro.
The same applies to those with a bearish bias. Today’s close at 5 pm EST will either help support your outlook or challenge it. It may even negate it entirely.
That said, it isn’t necessary to try to determine what will happen. Nobody knows the answer to that, and guessing is just another word for gambling.
What’s important is to stay neutral and patient enough to accept any outcome. Let the market show its hand before you commit to a position or even a bias.
How do you do that?
Simple. Let today’s session close (remember, I use a New York 5 pm EST close chart) before you make a decision one way or the other.
The pair will either hold above the 1.1700/20 support area or it won’t. If it does, we could see the EURUSD trend higher toward 1.1830 and perhaps 1.1950. Those are two levels I mentioned last week and again on Sunday.
And if the EURUSD should close the day back below 1.1700, it would signal that buyers have lost control, at least for the time being. It would also re-expose the 1.1530 support handle.
As for what you do between now and today’s close at 5 pm EST, my best advice is to do nothing. Any technical decision you make now in front of an event like a Fed rate decision is a mere guess, not to mention incredibly risky given the impending volatility.
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