Inside Day Setting Up Consolidation Plays

The dollar's wide ranging day on October 22nd has created support at 77.09 and resistance at 78.20. The past two days have been trading within the range creating an inside day.

This also is setting up as the October 31st FOMC meeting is looming. The Fed Fund futures reflect an 85-plus percent likelihood of a rate cut but this is far from a guarantee. There is of course the chance that the Fed could delay any moves until the December meeting. Keep in mind that a rate cut would weaken an already weak dollar. However a potential rate cut has already been discounted into the market to a great degree.

Today's housing numbers will no doubt play a role in the FOMC decision and statement, but it won't be the only factor. Consider that both gold and crude have pulled back from their highs which gives a temporary reprieve to the dollar and the equities market.

The EUR/USD is poised to take on the 1.4300 psychological level as it is breaking up through downtrend line resistance on the 60 minute chart. Resistance will be waiting between 1.4300 and 1.4360.

The GBP/USD is consolidating within an ascending, asymmetrical triangle. A break to the upside would require that traders take out the 2.0500 level.

The EUR/JPY has been congesting on the intraday time frame as well within a large symmetrical triangle. Currently is is favoring the lower third of the triangle pattern so keep an eye on the 162.50 to 162.00 area. The euro-yen had been selling off from the 167.74 high but has found support the last sessions just above 162.00.

Raghee Horner is a private forex, futures, and stock trader based in South Florida. She is the author of two best-selling forex trading books and a sought after speaker. All charts we used with permission from Autochartist.