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With a fill of 1392.50, the FOMC trap has now played out and the 1356.75 to 1392.50 gap range worked like a charm.

After a little uncertainty at the gap fill area where profit-taking occurred, we saw a pullback to just above old resistance at 1386.25 and now we are seeing a squeeze as the pros push into a resistance void to force bears who shorted the FOMC range to cover.

This might be a good time to re-read what I wrote in my April 18th post.  This is the push to a new structural high I was talking about–and it is impossible to know at this point whether it is going to be an eventual breakout of the spotter high at 1419.75–or if it will instead be a lower high (less than 1419.75) to set the channel slope for a bearish trending structure–after most are on the bullish side of the boat.

What we do know is that 1352.50 is the key bull/bear line and that the ‘right’ VST/ST/IT trade here is long from near that line (the gap fill at 1356.75 was an excellent entry spot) and now the best bet is just pushing up the profit stops behind that trade to see where this squeeze goes.

The pros love to use trident channels in this type of scenario, so I have drawn in a light green VST channel that has the rising top rail presently at about the 1405/1406 area.  We’ll see what happens if/when price gets there.

ES 1356.75 to 1392.50 was a very good setup and that trade is now in the ‘bonus’ area.

…my .02

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The 1356.75 to 1392.50 gap range scenario I pointed out weeks ago has played out nicely here…

The pros locked the range down ahead of the FOMC announcement and enticed VST traders to tighten and concentrate their stops on either side of the range.  They ran the bottom side before the announcement (filling the lower gap at 1356.75) and they went for the top after.

The high so far at 1392.25 is just .25 short of my upper 1392.50 gap target, but this initial pullback is likely sellers taking partial profits after the VST stops were run above 1390.

Nothing has changed here in the big picture.  The pre-FOMC trap was laid and the folks who can’t transition nimbly from trend-trading to range trading tactics were chopped up as they placed their bets inside the ‘kill-zone’.

In the big picture, 1352.50 continues to be the bull/bear line.

…my .02

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Today is the day the market has been waiting for.  We get the FOMC decision at 12:30 (New York), forecasts at 2, and a press conference at 2:15.

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I pointed out the gap range between 1356.75 and 1392.50 on my April 13th post and that was a pretty good guess for the restraining boundaries of the consolidation leading up to the FOMC announcement.  The bottom gap was filled on the 4/23 VST low at 1354 and so we’ll see if they go for 1392.50 next.

ES 1352.50 is the critical bull/bear line.

…my .02

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…still bouncing around inside the gap range (1356.75 – 1392.50), building up pressure for a move possibly coinciding with (or front-running) the FOMC announcement on Wednesday.

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ES analysis remains the same as my last post as we await a breakout from this consolidation range…

I have posted an updated hourly bar chart above showing ST range in light yellow, gap range inset in white, and the VST range in bright yellow with rising IT support trend line at the 1352.50 bull/bear line.

…my .02

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