A/U, A/J, trend lines & ADX before FOMC

I’ve come to my charts rather late today and as a form of therapy. We’ve had two major storm cells move through here with nearby hail being reported the size of baseballs and grapefruit and its debatable whether more rain fell outside or inside our house :-( Roof work next door has compromised our place and to say I’m mad is very much an understatement. Vent over…now….let’s look at how these two pairs are setting up ahead of FOMC. The AUD/USD and AUD/JPY are just two pairs forming up with trend lines and a favourable ADX set up ahead of the US interest rate announcement. Just how they will move with this news is unclear, but, at least these technical indicators may offer some help to guide traders with any breakout move.

AUD/USD

A/U monthly: note the two major fib levels just under current price:

  • the 61.8% fib of the major swing high move from 2000 to 2011 near 0.715 and
  • the 78.6% fib of the 2008-2011 swing high move near 0.71.

AUmonthly

A/U weekly: some clear trend lines to monitor here:

AUweekly

A/U daily: still making ‘higher lows’. A ‘lower low’ would come with a break of weekly trend line and would be rather convincing. Watch pout for any confirmation from the ADX:

AUdaily

A/U 4hr: another triangle is forming up within that larger weekly triangle. These will be the first ones to watch for any breakout move that might come with FOMC. Note how the ADX and -DMI are currently trending lower. Thus, watch for any uptick with the ADX and one of the DMIs to help support any trend line break:

AU4

AUD/JPY

A/J monthly: note how 89 is a key S/R level:

AJmonthly

AJmonthly

A/J weekly: like the A/U, this is bound by a triangle on the weekly time frame:

AJweekly

A/J daily: this is also making ‘higher lows’ and any ‘lower low’ would break this lower trend line so that is worth watching for with FOMC.

AJdaily

A/J 4hr: a more recent bear trend line is in play here too. Also note how beautifully the ADX is setting up ahead of FOMC. Any uptick and move above 20 should be easily noted along with any trend line break.

AJ4

Watch out if the A/J breaks to the upside and back above the 89 level following FOMC. This may have consequences for US stocks as well, especially the S&P500, as note how these two items tend to trade in tandem:

AJSPX

Summary: watch both the A/U and A/J for any trend line breakout trade that is confirmed with an uptick in the ADX; bullish or bearish. For any bullish A/J move above 89 though watch to see if this comes with bullish sentiment across on US stocks.

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