The currency market has lost some volume, as traders are closing their positions ahead of Christmas and New Year’s celebrations. Investment funds are in no hurry to open new positions; they rather prefer to be actively trading in January.
As the tradition holds then the ECB meeting should take place tomorrow. Everyone is waiting for only one thing to happen, that is, for the QE program to continue. You might ask “Why?”, this is because the QE did not reach the inflation goals.
On top of this, there is another concern surrounding FED, which has the European financial experts on edge.
The FED should make a decision on the 14th of December regarding the rate hike. This has been long awaited by many market participants and all macro-economical prerequisites are ready to support this event. Of course, the interest rates won’t be significantly increased, only about 0,25%. Yet, FED should let the market know that they are the ones pulling the strings in the American economy. The hike will mainly happen because they want to know the overall results. The outcome might be positive and then the FED could raise the rates by 0,25% or more. Seeing how the markets worldwide would react. The FOMC loves to watch, analyse and take a wait-and-see approach. In the current state, this is the most logical approach.
We are planning to sell away from the horizontal level of 0.8725. In this case, it is wise to wait for the candlestick patterns to form:
As for Australian currency, we have a long descending channel on the weekly chart:
We have a broken ascending channel + horizontal level of 0.7670 in the daily chart. Let’s sell the pair at the point, where the indicated lines cross:
Sell Limit 0.7670, Stop Loss 0.7800 (stop loss is a little bit too big, but it’s not wise to put it closer, as it can be broken so let’s lower the trading lot), Take Profit 0.7320.
Stay tuned for more and trade with Tickmill!