The major currencies (EURUSD, GBPUSD, USDCAD, USDCHF, and USDJPY) are in a tight congestion area ahead of the central bank announcements. While the markets are moving slow ahead of these rate announcements, the two that will generally create the most volatility are the FOMC this Wednesday at 2pm EDT, followed by the Press Conference at 2:30pm EDT, and Thursday’s ECB Press Conference at 8:30 am EDT. Here are the areas identified.
Congestion Area Identified on Major Currencies
There are three central bank rate announcements this week:
- FOMC on Wednesday
- ECB on Thursday
- BOJ Thursday evening into early Friday morning
The largest area seems to be on the USDJPY weekly chart. The congestion area on the weekly chart has a high at 111.42 and a low of 108.07. Price has been moving within this range since the end of April. Hopefully, the rate announcements will shake it up a bit.
The remaining currencies have formed holding patterns on the 240-minute charts. The USDCHF has formed a high of .9886 and a low at .9830. Although price did form a reversal bar to the downside yesterday, so far, price has really failed to follow-through.
The USDCAD also has a congestion area pattern on the 240-minute with virtually no movement in either direction. The high of the congestion area is 1.3028 and the low of the area is at 1.2975.
The congestion area on the EURUSD has a high at 1.1818 and a low at 1.1736. Although the daily Stochastics is indicating that the market is overbought, the weekly is indicating an oversold status.
The GBPUSD 240-minute chart is also in a holding pattern with a low at 1.3343 and a high of 1.3419. Additionally, the daily Stochastics is indicating an overbought status and the weekly is indicating an oversold status.
When these types of patterns appear on the higher timeframe, it can also create congestion areas on the lower timeframes. The smaller the movement size on the lower timeframes, the more losses a trader may incur. This also highlights the “no position” is a position sometimes when trading. Sometimes sitting on the sidelines is just as important as being in a trade.