Today the Euro FX futures were on the Buy day of the Taylor Trading cycle and an NR4 pattern on Tuesday gave it a breakout setup today as well. This gave us a good buying opportunity.
Tuesday was the second consecutive day down. Normally we would anticipate a Taylor Buy day on Tuesday however it turned out to be a bearish session, so the Buy day signal was “recycled” for Wednesday. Tuesday was an NR4 day (signal of weaker downside momentum) and the market had stalled out in support in the 1.0660s (Fib support at 1.0669, MA support at 1.0662).
Today’s combination of TTT Buy day and the NR4 meant we would look for the market to trend higher over the course of the session, so we would look for go long when we saw bullish momentum in anticipation of a rally over the balance of the day. Normally we would look to go long early in the day however with the FOMC meeting as the most likely catalyst for a move today, looking for a trade after 1 P.M. was a better time today.
For a standard TTT Buy day we look to go long after the market finds support around the previous day low, however today the Euro never tested the Tuesday low. However, the NR4 pattern meant we would look for a breakout trade – to go long when the market showed upside momentum. In this case we would look to buy when it rallied above resistance. In the morning STI watch list I suggested we use the 1.0700 level, and the Tuesday high of 1.0706 was next.
The Fed’s announcement proved to be a bullish catalyst, and the Euro rallied after the release. This rally triggered a long entry, and we saw a trending move rally over the balance of the session, as we would expect on a breakout day.
I used the Euro as an example of how STI would look to trade after the Fed; if you want to look at similar examples there were equivalent moves in the stock index futures, the Canadian and Australian Dollars, gold and silver.
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