News releases often create sharp volatility. Today
was no exception. When US CPI came out eur/usd price
initially spiked high above European session high and then quickly went down
below yesterday’s low and quickly bounced of it too. As I wrote in my previous
post, I closed my short position a few minutes before the release at 1.1040 level
(20 pips of profit) in order to avoid such volatility as I have already
described and as you may see from the chart below.
One thing is clear: nothing is clear. Choppy price
action may also mean that “All EYES ARE ON FED”. Despite some bullish price
action at the lows today you cannot really say whether price is going up or
down. Tiny longs may be attempted at this level with stop losses some thirty
pips below the low of the day (1.0975 level). If price spikes up after FED
minutes release and forms a reversal pattern we may attempt a short with a
target below today’s lows (at around even number of 1.1000).
Although we have plenty of time till the release it
is better to wait out rather than to put your head under the ax of FED. They
can create even bigger volatility.
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