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In terms of key events to keep on your calendar, the FOMC statement and following press conference have always ranked in the top 3 in terms of producing increased volatility. However tomorrow’s FOMC promises to be even more volatile than usual given the speculation surrounding a possible rate hike.
While we won’t know for sure until 2pm EST tomorrow, the widespread speculation of when the Fed will hike rates is sure to play havoc on the markets, especially USD-based pairs.
With this in mind, today’s commentary will focus on key levels to keep an eye on following the event rather than active trade setups. So while a break of any of the levels below could trigger a setup, these are not tradable patterns just yet. In fact it’s prudent to remain flat until tomorrow’s session closes at 5pm EST.
The first key level I want to discuss is the 1.2800 level on USDCAD. For those who have been following along, you should be very familiar with this setup. You may have even traded the bullish inside bar that formed on March 9th, where our first target was the 1.2800 level.
The second target for the setup was and still is 1.3000. However it’s unclear as of this writing whether the pair will reach this level before pulling back to support at 1.2662 or possibly even lower. One thing is for certain though – tomorrow’s FOMC statement will provide the catalyst needed to either break above 1.2800 or move back down to retest support at 1.2662.
Summary: Wait for tomorrow’s session to close at 5pm EST following the FOMC statement. If the pair closes the day above 1.2800, look to enter long on a retest of the level as new support targeting 1.3000. A move back to 1.2662 would have us looking for bullish price action on the daily and 4 hour time frame for a move higher.