ES Levels for March 21, Post FOMC Interest Rate Decision

3月21日

The market responded to the U.S. Fed’s Interest Rate decision for no cuts to the Prime Rates and dovish rhetoric to stay the course, sparking ES to breakout of the ascending triangle that has held the price while creating all-time highs each subsequent week.



The market pushes equities yet again to all-time highs, with ES1! ESM2024 moving up to 5307 to finish Wednesday. 5307 is a very specific technical number, as it is the 1.618 expansion of the 5D range (March 15 low 5167.50 to March 14 high 5253.75).


Often, we see price gap up quickly following bullish sentiment from FOMC Interest Rate decisions. In prior meetings this year, these gaps have helped to sustain the 5-month rally. 

A look at other equities markets shows this sentiment is not unique to the US, with Japan, Canada, and UK also following suit.

In particular, US Treasury Bond yields US02Y US10Y dropped quickly following the announcement, and this led to many high-debt growth stocks to surge GOEV NASDAQ:STRC PLUG WULF in the late afternoon trading on Wednesday. This is presumably due to short hedge positions unwinding quickly to adjust for the confirmation of pivot in prime rates.

Going forward into Thursday, it is reasonable to expect a slight pullback, but often these squeeze may continue to a next technical extreme.

• A pullback to 5289.50 would yield a standard 0.236 retracement, which is also the high of the New York RTH session. It may be less likely until this trend reaches exhaustion.
  
• Using the prior day’s fib expansion levels, we see 5315.25 at the 1.272 RTH expansion
  
• Using 10D range 1.618 expansion hits 5318.
  
• The 1.272 expansion of the full prior day range reaches 5327.25


  

Keep tabs on whether price continue to advance above the moving averages. As the uptrend continued even as volatility diminished overnight, this points to likely continuation until a key technical level is triggered.


Context and conditions - where are we now?

- All time highs for US equities
- Japan futures NKD1! are at highs again, not unique to U.S.
- Bonds are bouncing after a month of selling
- High growth stocks which were under pressure bounced
a lot at end of day, signalling a short squeeze with shorts closing their positions.

Likelihood - what to expect in this range?
- We may not see a typical retracement of the averages, despite reaching extreme range
- We may see a pullback and then you can gauge buying interest at the 1 fib pullback
- Typically when range expands into new channel above, this will last 1-2 days before a sharper pullback

Strategies that may work well
- Weekly and Prior Day Range Fibonacci Levels
- EMA20 5m support/breakdown
- Higher timeframe MACD
- Keep track of liquidity on order book and options
- PVI and NVI indices to capture whether the trend is being steered by large volume traders or smaller volume

Levels
5327.25 1.272 Prior Day Range Expansion
5318 1.618 2-week range expansion
5315 1.414 expansion prior day RTH
5298 0.118 retracement prior full day
5278 0.382 Prior Day Retracement

Optimal sessions
03-4h30 Europe volume, reaction to rates and bonds
08h30 to 10h00 Final expansion
11h30-13h00 Range bound strategy

Yesterday's charted levels live and on my chart: 74 pts

Follow my charts and ideas for daily key levels. More information available on my links to my website.