Fed vs Wedge
It’s been a long time since I’ve traded on Fed day, and today was no exception. But at least watching the whipsaw action before and after the announcement was interesting. After spending the first four hours in less than a three point range, the Federal Reserve changed a few words in their policy statement and traders reacted with an explosive rally. But we still ended the day with less volume than yesterday.
What about the wedge I pointed out? Patterns are just like trades at support and resistance, or at Fibonacci levels. You still need a trigger for your entries, and I didn’t see one today. Mark this as a pattern failure.
As for today, I have no way to trade this type of action. I know of people that place stop entries above and below price on Fed day hoping to get triggered into a trade in the correct direction, but that’s not my style of trading.
On a daily chart this move has now exceeded an A-B-C 100% Measured Move off the recent bottom, so I no longer have a downside bias. Tomorrow I’ll be willing to take a clear setup in either direction.
