ANALYSIS PRIOR TO FOMC MEETING
On the 20th September (Wednesday), the evening before the Federal Open Market Committee (FOMC) meeting, we had our Alpha Play Weekly Traders Meetup where we shared our analysis and insights on the US Dollar (USD); and how we are preparing to trade this risk event.
We also discussed on the concept of Indirect Market Correlation, and how the Euro Dollar (EUR) will be affected during such high impact risks event as well.
In particular, we picked the EURNZD currency pair as a case study and discussion during the meetup.
Watch the video recording below for a sneak peak of meetup.
*To protect our traders’ interest, not all pairs and details will be discussed in this post.
Congratulations to both our student Edwin and Jerry for PROFITING over 500 pips on the EURNZD trade as discussed and shared during the meetup!
Jerry’s trade plan was to short the EURNZD, based on the concept of Indirect Market Correlation, leveraging on the potential selling pressure on Euro Dollar from the FOMC meeting.
On the other hand, Edwin’s trade plan was to look for buying opportunities on the EURNZD pair, understanding that the FOMC meeting might push the Euro Dollar lower to complete the structure for a buy setup.
In this week trade example and case study, we witnessed again how our students are able to trade and profit from the market confidently.
The price on EURNZD did fall (where Jerry profited from his short), before rallying back up (where Edwin then profited from his long).
Profiting from trading the currencies market doesn’t need to be complicated and difficult. The key is in understanding the nature of the market, and how price will develop.
KEY FOCUS THIS WEEK
The focus for this week will definitely be on the New Zealand Dollar (NZD), a.k.a the Kiwi.
The New Zealand’s central bank – the Reverse Bank of New Zealand (RBNZ) will be releasing their latest Official Cash Rate and the Rate Statement this Thursday. Since the interest rate is expected to remain unchanged at 1.75%, the key will be the tone of the Rate Statement.
A dovish tone will see more selling pressure on the NZD; while a hawkish tone will see the NZD being support by the bulls.
Based on our analysis, we are holding a bearish bias on the NZD.
Since late July this year, the NZDUSD has fallen from the high at 0.7557 to the low at 0.7131 in a 5-wave structure; and has since bounced higher towards the recent high at 0.7434 in a 3-wave structure.
According to Elliott Wave Principle, a complete price cycle comprises a 5-wave move, followed by a 3-wave correction.
With that, the correction in NZDUSD is deemed to be completed, and we are now expecting more downside potential for this currency pair.