Tomorrow We Have FOMC & Daily Soybean Oil Chart & Trading Levels 9.16.2020
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It’s that time of the year where December contract is the front month for all stock indices/ currencies/ financials and other markets!
Tomorrow we have FOMC.
However, FOMC days do have unique behavior and this time my guess is, it will be around the language used after the announcement.
The following are my PERSONAL suggestions on trading during FOMC days:
Reduce trading size
Be extra picky = no trade is better than a bad trade
Choose entry points wisely. Look at longer time frame support and resistance for entry. Take the approach of entering at points where you normally would have placed protective stops. Example, trader x looking to go long the mini SP at 3325.00 with a stop at 3319.00, instead “stretch the price bands” due to volatility and place an entry order to buy at 3319.75 and place a stop a few points below in this hypothetical example ( consider current volatility along with support and resistance levels).
Expect the higher volatility during and right after the announcement
Expect to see some “vacuum” ( low volume, big zigzags) right before the number.
Consider using automated stops and limits attached to your entry order as the market can move very fast at times.
Keep in mind statement comes out at 1 Pm Central time, the news conference which dissects the language comes out 30 minutes later so the volatility window stretches out.
Know what the market was expecting, learn what came out and observe market reaction for clues
Be patient and be disciplined
If in doubt, stay out!!
Find the clues?
Daily chart of Bean Oil futures below along with a graph showing the changes in the Non- Commercial long/short difference (weekly basis).
Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.
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About the author
Ilan Levy-Mayer has been a commodities broker for over 15 years, and holds an MBA in Finance and Marketing from Hebrew University in Jerusalem. Ilan is currently the Vice President and a Senior Broker at Cannon Trading Company . He is also a CTA of Levex Capital Management and his daily blog was voted the #1 Futures Blog from Trader’s Planet.
His experience in the industry dates from the beginning of online trading, and he has also developed several trading systems over the years. In addition, Ilan has written several articles about trading methods and trading psychology, and has been quoted and published several times in SFO magazine, Futures, and Bloomberg. He has been invited to speak at the Chicago Board of Trade, a significant distinction.
Ilan specializes in analyzing the markets based on timing methods, proprietary technical indicators, using support and resistance levels and looking at multiple time frames.
Disclaimer: This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts here in contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgement in trading.