The
S&P 500
Emini is near the daily moving average and will likely have to reach it in the next day or two. This is because the moving average is a reflection of the fair price, which is often tested when the market is transitioning into a trading range.
The daily chart is near the middle of a tight trading range that has gone on for at least two weeks. This puts the market in breakout mode, making the probability close to 50% for both the bulls and bears.
Today is an FOMC day, which increases the risk that the report will be the catalyst for the breakout of the tight trading range on the daily chart.
Overall, the daily chart is neutral going into the FOMC report. Traders should wait for a clear breakout of the tight trading range and assess the probability of success or failure.
Emini 5-minute chart and what to expect today
Today, a reversal was formed at bars 4-5 due to yesterday’s strong rally at bar 77.
Traders should expect a 2
nd
leg up after bar 5. The bulls need to break above the bar 78 high, or the bears will see it as a possible double top.
As mentioned above, today is a FOMC day. Traders should be flat at least 30 minutes going into the report. Most traders should stay flat for at least 10 minutes after the report.
The FOMC report typically increases the volatility, which means bigger bars. Traders should consider trading 20% of their average position size to ensure they are trading small.
Because there is an increased risk of volatility and reversal during the FOMC, traders should consider treating today as a half day and not trading the report.
