Uncertainty has traders sitting on the sidelines
If event risk is high, it will tend to push traders to the sidelines. We may start to see this dynamic play out. That can have the potential to stall the action. It may lead to choppy up an down action.
The Asian-Pacific session saw the price open lower and fall to the day's low at the 1.0684. The low took out the low from Thursday but not the low for the week at 1.06736. The price fell below trend line support but quickly rebounded.
The European/London session has seen the price in a 46 pip trading range and remains in the middle of the range. The pair has been mostly below the 100 hour MA (blue line in the chart above). Like the break of the lower trend line, there was a break of the 100 hour MA above and that break failed.
The US empire manufacturing was just released and it was weaker than expected. The price barely moved for the 1st 5 minutes. We have just ticked up to 1.0738 but action remains contained.
There will be a lot said and "thoughts" shared on Fed policy, ECB policy, implications to the global economy from the terrorist activity, etc over the near term. There will be actions and reactions by governments. There may continued terrorist activity. Who knows? The fact is we don't know.
That means to me that overall risk is increased - market risk which is the price risk we face every day, and also event risk and liquidity risk. When risk is increased, is it a great time to trade? No. So trade cautiously. Be patient for extremes. Define your risk. Look to take profit when you have it and limit losses. Take partial profit and get a "free trade" on the balance. Those are thoughts you should focus on.
