FOMC Day Strategy Consideration

FOMC Tomorrow

FOMC tomorrow and the markets are expecting .25 BPS cut in rates, however, traders will pay close attention to the verbiage in an attempt to predict future moves in 2026 based on the presser with Jerome Powell 30 minutes after the data release.

As of now, markets see opportunities for additional reductions in the three meetings before the June 2026 meeting and will that change as a result of the presser?

The following are suggestions on trading during FOMC days:

·      Reduce trading size

·      Be extra picky = no trade is better than a bad trade

·      Choose entry points wisely. Look at longer time frame support and resistance for entry. Take the approach of entering at points where you normally would have placed protective stops. Example, trader x looking to go long the mini–SP at 6825.00 with a stop at 6815.00, instead “stretch the price bands” due to volatility and place an entry order to buy at 6810.00 and place a stop a few points below in this hypothetical example (consider current volatility along with support and resistance levels).

·      Expect the higher volatility during and right after the announcement

·      Expect to see some “vacuum” (low volume, big zigzags) right before the number.

·      Consider using automated stops and limits attached to your entry order as the market can move very fast at times.

·      Know what the market was expecting, learn what came out and observe market reaction for clues

·      Be patient and be disciplined

·      If in doubt, stay out!!