FOMC- May 5, 2023
1. Fundamentals
- We had massive selloff the day before and there were large fears about regional banks. XLF led the entire selloff yesterday and today there was really no movement beyond the opening range until the hike was announced of 25bps. The market has been rallying for the last few months with hopes of a fed pause from JP because of all the regional bank failures that have occurred. If JP was going to be hawkish at the meeting then all hell was going to break lose.
2. Technical Analysis
30d:30m
- The initial spike from FOMC broke above the month to date and week to date anchored vwap then immediately started selling off. It also never had a 30m candle closure above the opening range.
1d:5m
- This spot at 4147 was the exact time that JP said that he was expecting rates to stay high via inflation lasting a very long time. As you can see we had a crazy move off that level
1d:2m
- Once we cracked below the 30m H/L opening range and had a candle close below that level where it used it as resistance, that was another signal that momentum would likely continue.
3. Trade Strategy
- When JP says something very hawkish and we are clearly bouncing between the opening range, take the short and hold until a 5m candle closes above the 9ema. If I wouldve done this I wouldve had a 25 point trade.
1d:5m
- If I missed the first trade I couldve gotten back in on the lower high retest where we failed only 1 tick below the previous lower high and then I couldve sold at LOD or again when a 5m candle closed above the 9ema.
