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Forex: Beware the Temptation of the Fed and Tawdry Technicals

Forex: Beware the Temptation of the Fed and Tawdry Technicals

John Kicklighter, Chief Strategist

Talking Points:

• Next week's top event risk is the Wednesday FOMC rate decision - carrying a not-insignificant Taper risk

• Chart patterns range from high profile reversal threats (S&P 500) to imminent breakouts (USDollar)

• Yet, a liquidity drain is assured while the most market-moving Fed outcome is low probability

What kind of Trading best suits you? Technical or Fundamental? Short-term or Long-term? Take our Trader Survey and find out.

The charts are seductive. Traders starved for volatility and hopeful for a few more trades before the end of the year are eyeing provocative reversal threats from the S&P 500, EURUSD and USDJPY amongst others. Whether we are looking to tempt the fates with the long-overdue collapse in engorged risk trends or see a strong extension of existing momentum, the problem is not the technical patterns nor the preponderance of fundamental catalysts. The issue is market conditions themselves. Is it likely that we mount a full trend or even a heavy swing as liquidity drains through the year-end? We discuss heavy event risk versus inevitable conclusions in the weekend Trading Video.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.