FOMC Brings Little Volatility, New Record High

After putting in another new record high at 2507.25 early Wednesday, price balanced in just a 5 point trading range before the release of the 2pm (ET) FOMC minutes, which brought a little volatility and a sharp drop and reversal.

new all time high FOMC day

The 10 point drop in J (10th 30 minute) period reversed at a tick above the unfilled single print from the 9/15 profile at 2493.75, and rallied higher to close the session near unchanged at just a few ticks above the previous close where price traded in just a 5.5 point trading range.

Focusing on the CME settle from Wednesday at 2505.25:
If price opens within Wednesday’s range above the settle the early focus could be on the two ticks of excess at the new all time high. Removing the excess and finding acceptance above 2507.25 puts price in un-charted territory and on to another record high. All trends remain up, and the market is in its 10th consecutive month of one timeframing higher.

If price trades above Wednesday’s new all time high, adding excess to the TPO chart, but fails to find continuation higher and returns back into Wednesday’s range (a “look above and fail” scenario) – or if price opens within Wednesday’s range below the settle, which could be early resistance – the focus would shift back to the 2500 level and the prior weekly high at 2498.00.

Acceptance below 2498.00 targets Wednesday’s low at 2494.00, acceleration/acceptance back into the lower distribution from 9/15 targets the closely grouped together prior daily lows lows, setting up a potential “firecracker effect” if potential stops are triggered below. The nearest gap below from 9/11 at 2487.00 remains unfilled, and the profile from that day was poor with multiple anomalies that could be in need of repair if volatility ever returns to the market.

Another potential scenario, which is probably more likely in the absence of any lasting volatility, would see the market continue to balance within or near Wednesday’s range. But be on the lookout for increasing volume, a liquidation break could be overdue because of the mechanical nature of the recent rally and the poor structure below current price.

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