Traders Look Forward for the FOMC

Tuesday brought us a bearish correction and Wednesday brings us its continuation. Traders have started positioning themselves ahead of today’s Federal Open Markets Committee (FOMC) meeting. The correction is pretty small and largely controlled, so it looks like investors don’t want to abandon stocks ahead of the FED meeting. They’re most likely avoiding missing another bazooka or additional helicopter money from the Federal Reserve. In any case, this evening will be very exciting.

Ahead of this meeting the SP500 is finishing a head and shoulder formation. The right shoulder is already formed and in theory, we should see a breakout of the neckline. The problem for sellers is that buyers bounced from the neckline with a very handsome hammer candlestick. For many price action traders, this means a denial of the head and shoulder and an interesting buy signal.

The SP500’s German peer, the DAX is in a very similar situation but in this case, the neckline was broken. Is this breakout giving us a sell signal? If yes then not a very convincing one as the hammer is also present here. In addition, the price is still above the major up trendline. Actually, sellers did not have enough strength to even test this line as a support. Sentiment ahead of the FED meeting still looks positive.

The last asset is the EURUSD, which finished a bearish correction yesterday and got another buy signal. For three days, the price was inside of the wedge pattern and yesterday broke its upper line. In addition, the price also bounced from the mid-term up trendline. Hours before the FOMC, sentiment is positive.

For a look at all of today’s economic events, check out our economic calendar.