Although it didn’t “officially” have a breakout setup (no breakout patterns, per se), we still anticipated a breakout move for the stock index futures after the FOMC meeting ended. This meeting probably had the most uncertain outcome of recent meetings so a relatively large change in “fair value” was a likely outcome.
For the EMini S&P futures, we were anticipating a breakout trade after the 1 PM announcement. In a note I sent out around 12:30 I suggested we watch the session low of 2265.25 as our reference price for a downside breakout. As it turned out, this level was a 50% retracement of the past two days range so a break below there would likely lead to a move to Monday’s low.
The break actually took some time to get going; the first move was up with the down move beginning about five minutes later. The first break of our reference price came around 1:10 PM, triggering our first short sale signal. The market made a short covering rally into the start of Yellen’s press conference, leading to a test of our reference price level, leading to a test of our reference price level.
“Support becomes resistance” proved an accurate axiom as it was unable to hold above the reference level, turning back down to make a session low of 2248.00. It held over two tests of the Monday low, ending with a close in the middle of the post- FOMC range.
Essential Guide for Futures Swing Trading
In this guide, experienced trader and broker Scott Hoffman explains the trading methods he uses to analyze and trade the futures markets and to publish his trade advisory, Swing Trader’s Insight.
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