FOMC Day Tomorrow - Expect Big Volatility in SPX. July 26th Plan

After the steepest rally in nearly 3 years in ES from July 9th to July 19th - 8 consecutive trading days of higher highs for the first time since October 2021 - ES did as expected and what it always does after a large leg up: Spent the last week or so building a sideways base, forming a new chart pattern between 4590s and 4560s, and setting up its next leg higher. Today, we broke out and continued higher.

As readers recall, I was long into today’s session. Why? Because for the past three days - as discussed yesterday - the aforementioned pattern built between 4592 and 4560 was a triangle with a bullish breakout bias. This morning, it broke it out at 4590 and started a push higher. While this was a fantastic move and longs paid nicely, there is some room for concern as the breakout occurred before tomorrows FOMC meeting, and this is never ideal as it is in some cases “pricing in”. Breaking out prematurely, with less time to build energy, before a catalyst event adds risk for those in the breakout move.

How will it play out? In today’s newsletter, I’m going to talk how I trade FOMC days and break-down the last two FOMC’s, I’ll then talk a fundamental setup of mine that lead me into today’s long, then break down the trade plan for what should be a complex day tomorrow.