Waiting for the Fed

Currencies have been close enough to comatose today to get me thinking about equity futures, at least until the Fed’s announcement (2:15 EDT). In addition to the FOMC statement today, which seems unlikely to offer any major policy changes, we get the ECB meeting tomorrow and non-farm payrolls on Friday. The ECB could conceivably be interesting, but the presence of so many potential catalysts is keeping institutional investors pretty close to home.

In his excellent coaching session last night, Todd mentioned the importance of being aware of what is going on in different timeframes, and of noting support and resistance on the longer term charts. With that in mind, I resolved to take a look at the daily chart of the E-minis (ESU2).  In this timeframe, 1387.50 has been resistance, while 1337 looks likely to provide some support.

At this point, despite the potential headline pitfalls, the uptrend appears to deserve the benefit of the doubt. In retrospect, the tag of the 50% retracement level (1327.75) would have been a very nice buy; in fact, the contract could have been purchased at or close to that level twice, with good results on both occasions.

I wouldn’t want to bet on the third time being the charm, but the highs have been marching gradually higher (1375, 1376, 1387.5). If the contract can make it through this week with the trend intact, I’d certainly be encouraged to look for places to do some buying.

While I was typing, the FOMC announcement did come out, almost precisely as expected. Apparently, there were some who were looking for some sort of reference to QE3;  the consensus, however,  favored September. In my market, EUR/USD came off roughly 60 pips, a nice change from the earlier tedium.

Best of luck!

About the Author Brian Keith


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