16 Jun 2015

POTENTIAL AUD/USD TRADE ON FED RATE DECISION

AUD/USD H4

As we all know, traders are impatiently waiting for the main event this month - Fed rate decision + Yellen's press conference right after.

The market participants expect nothing more than a clear confirmation ''No, rate hike in June'' and by default - it should push the ''risk'' currencies higher.

Of course, the other possibility is that Yellen removes the phrase - ''data dependent'' from the statement and gives us clear guidelines as to when and how the rates will be hiked. In this, less likely scenario, the US dollar would see great strength and the ''risk'' currencies together with equity markets would suffer the most.

As always, when looking for trades, we want to find not only the best fundamental situation between the currencies, but also a good technical set-up. In this situation my favorite pair will be AUD/USD.

As I have mentioned before, I am looking for a dovish outcome of tomorrow's meeting, therefore, I will be looking for an upside break above 0.7800. Take a note that we most probably will have to wait till the end of the press conference as we might experience false breaks on the initial statement.

So, a break above 0.7800 would make the current support at 0.7700 as a good level to set our protective stops against. As for price targets we should choose the 100% and 161.8% breakout targets at 0.8020 and 0.8150 - a level which also nicely coincides with the current larger range highs.

Good luck with trading the statement. I will keep you updated on how it goes

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