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“There is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.”
— Jesse Lauriston Livermore
This morning after the EU open the 6E futures started to go up. The first pullback after the impulse move up was a very good opportunity to go long. On the 5m 310 oscillator both the slow line (SL) and the fast line (FL) turned up. After the SL crossed the zero line to the upside the FL pulled back just below zero before continue to go up again thereby printing a nice First Cross Buy setup.
Price was also at the prior day low and moved back into yesterday's value.
As a target we can use yesterday's VPOC, VAH, YVAH and YH.
Going to a lower time-frame like the 1m would provide more opportunities to hop on this trend/reversal.
Next week is FOMC. Do you have a plan yet? Here is one.
How to trade FOMC according to Tom Hougaard.
Tom Hougaard downloaded the data from every single FOMC day he could get his hands on and tested everything from tick charts to 15min charts. He found something interesting on the 10min chart which led to a setup he called the "FOMC Rule of 4".
Tom tested it on the Dow Index and his research suggest that bar number 4 (after the FOMC release) is a reliable bar to "bracket", to use his own words.
The "FOMC Rule of 4" says to go long above the 4th 10min bar after the release of the FOMC Statement and to go short below the 4th 10min bar after the release of the FOMC Statement.
That's all. You figure out where to exit yourself, be it with a profit or a loss. The entry is mechanical but the exit is not mechanical. That is where your instincts as a trader comes in.
Now we believe Tom to be a good guy who always speaks the truth but a little research ourselves can never hurt. Ugh, that sounds like work.
Let's take a look at the ES during FOMC in 2022 and 2023. How well did the "FOMC Rule of 4" do?
I will post the charts tomorrow. But, of course, you can take a look yourself if you can't wait that long.
As promised in Post #186. Here are the 10min bar charts of the ES during FOMC over the year 2022 and an overview of the FOMC data.
On the charts the high and the low of the 4th 10min bar (signal bar) after the release of the FOMC Statement (which is at 2:00 ET) are marked with OR-High (that's where to go long according to the setup) and OR-Low (that's where to go short). The Pre-High and Pre-Low are just the high and low of the period between the release and the 4th 10min after the release and have no significant meaning. Remember that 30min after the release of the Statement the FOMC Press Conference starts. This means that the signal bar is formed 10min after the start of the Press Conference. The next bar will be the entry bar.
Here are the 10min bar charts of the ES during FOMC over the year 2023.
Let me know what your conclusion is, lesson(s) learned (if any) and what your game plan for trading the FOMC looks like (instrument(s), time frame, setup(s)).
After FOMC let me know if and how you traded it, sim or live, and what the result(s) were. Thanks.
