Trading the FOMC

Pivots..Previous highs/lows/closes

What I notice is that on the announcement, the fakeout move down is often a test of some price point including pivots previous high, low and close. Those of you who use pivots can bring up your charts and check it out. I always look for price to test the previous day's open, high and low.

Also I find that including weekly and monthly pivots can add value to the work.

Here is a reference to a similar chart showing the move testing a pivot and then spiking up

http://www.elitetrader.com/vb/showthread.php?s=&threadid=48928&perpage=6&highlight=fomc&pagenumber=2
 
I open ES and ZN charts and watch them move as when the FOMC announcement comes out. And then, I sit on my hands and do nothing since I have an ATS. It's a good strategy and generally works.
 
Intrestingly enough, the SPY is hovering most of the day around the S2 pivot point. If the reaction is good to the FED tone, then a break to the upside could foretell a run to the Pivot Line or higher, but I would see the S1 at least as the first pause point or exit point. Or for adding more to the position for a run higher depending on how you play it. Will follow it with interest today.
 

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Haha yes that one works 100%

For those who actually play this move, the bigger players position themselves with bracket orders and hedges in related markets.

They go a step further than I have here. What they have is accurate information that shows how the influence of the announcement spreads from primary markets (like the S&P, Currencies and Bonds) to secondary markets (futures out months for instance). This ripple effect takes very little time (seconds at most), but gives them (smart money) just enough lead time to see the main reaction and make a play. Those of you who talk about pulling up several charts could do well to choose different markets to try to catch this phenomena.

Steve
 
Optioncoach:

Just a suggestion. Try looking at SPY with a LRC (linear regression channel) in place (keep the pivots on).

If you have the ability to do so, look at daily, 60 min and 5 min charts with that setup.

What you will see is a confluence of pivots and the channel lines

Where pivots and channel lines intersect, it seems that price tends to pause (or reverse) there. These tend to be good places to enter/add or exit trades.

Hope this helps.

Steve

Alright then I am out for the day. I wish everybody good luck in the markets.
 
Will look into it, Tradestation only seems to have a linear regression line and curve but no channel...

Quote from steve46:

Optioncoach:

Just a suggestion. Try looking at SPY with a LRC (linear regression channel) in place (keep the pivots on).

If you have the ability to do so, look at daily, 60 min and 5 min charts with that setup.

What you will see is a confluence of pivots and the channel lines

Where pivots and channel lines intersect, it seems that price tends to pause (or reverse) there. These tend to be good places to enter/add or exit trades.

Hope this helps.

Steve
More...
 
Okay I am REALLY out of here now (I will do anything to avoid the dentist I guess)

Check this chart out OC (today's Russell w/5 min candles).

Hope it helps.

Steve
 

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Quote from optioncoach:

Looks like market is already making its move lol....
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Hmm. Looks like a clear case of premature evaluation. Premature evaluators are advised to stay calm, go with the flow and focus on their breathing to make the most of the situation.
:D
 
Quote from optioncoach:

Looks like market is already making its move lol....
More...


Yeah in the WRONG direction. Today is a down day. Trading the FOMC is proof that most traders here are inconsistant traders. Why try to guess what the market will do? If you don't know- do nothing. There are plenty of GOOD days to trade.

I notice that Steve46 who originated this post had to "leave" even though he felt trading the FOMC was worthwhile enough to create yet another "teaching" thread. I also notice he made no actual prediction about what to actually do. Just spewing endless meaningless crap.

The sock puppet
 
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