Tomorrow Is FOMC. Volatility Incoming in SPX. What Way? March 20 Plan

Last week was the first week since October 2023 that ES put in two red weeks in a row, but these two red weeks concluded with something very technically significant on Friday afternoon. As discussed extensively, on Friday afternoon, we tested support of picture perfect major uptrend line dating back from January 17th. I provided this on Thursday when I wrote: “5168: Trendline connecting the Jan 17th and Feb 21st higher lows” and we hit 5167.75 low of day Friday, triggering longs for what was a 75 point rally.

After this rally, we began a dip to start today. I concluded my newsletter yesterday by writing: “Market waiting on FOMC now. My lean is always the same: To defer to the powerful trend. ES is forming a triangle 5245-50 to 5183”. Today, we filled this triangle out perfectly, dipping to 5185 this morning then bouncing up back up to 5245 triangle resistance into the close. As written above, this is all just pattern formation as ES builds a base before the real catalyst: FOMC tomorrow. FOMC days (along with CPI), are the most volatile, difficult, significant trading days of the year for ES.

Last FOMC saw a 90+ point dip then 130 point rally within a couple days. What could we see this time, and which way will the triangle break? In today’s newsletter I’ll talk this, I’ll then do a deep dive into the long setup that caused this weeks 75 point rally to start. Finally, I’ll go over my system for trading FOMC days, and provide the actionable trade plan for tomorrow.