"Experience taught me a few things. One is to listen to your gut, no matter how good something sounds on paper. The second is that you're generally better off sticking with what you know. And the third is that sometimes your best investments are the ones you don't make." ~ Donald Trump
The FOMC decision produced some 'real' moves today but in what context?
- They were not 'real' moves in terms of the size of movements seen in markets such as the Dow Jones & the Euro vs. Dollar.
- They were not 'real' moves in reference to the volatility produced in major markets
- They were not 'real' moves in terms of the directional closes for these markets
- They will be seen as the real moves in reference to our technical analysis chart anticipations
- They will be seen as real moves in terms of breakout fake outs as per price action
- They could be seen as the real moves that 'ignite' the declines which will follow on soon
In our previous update we made reference to the upside moves seen in the Dow Jones and the Euro but dismissed the quality of upside and simply labelled it as a month of sideways action.
Four Hour chart for the Dow Jones, shown previously:
The Following comments were made:
The chart above shows the range of the past four weeks marked out by the red range lines. Alarmingly the Dow Jones has been travelling in around a 300 point range from 10900 to 11200.
What would this mean over the short term?
It seems like we are about to find out within the next two weeks!
A failure at current levels could prompt a decline towards the lower end of the range (marked by the yellow forecast trend lines), a snap of which would be detrimental for price action.
The other scenario is a possibility of a breakout - fake out! A marginal high under 11300 should instantly have price move back into the range after which it slides to the lower end of the range.
11250 is standing firm but a high above this level may be the perfect setup for prices to swing lower. This can be seen by the blue forecast trend line.
The upward price action will be apparent to all, however in reference to the chart above, we at TMS, will be happy to view it as range bound activity. One in which can trap the majority with a decline from here or a decline from a marginal new high. The closing price today will be very important as the 11200 juncture is seen as failure point so far. Will they reject it again or play the sucker move?
The FOMC Rate Decision Price Action Update for the Dow Jones
Dow Jones Four Hour Chart:
After the FOMC rate decision whipping the Dow Jones failed to make a new high but produced an hourly close above our higher end range line. This has the potential to topple in after hour's overnight action or the market can produce a marginal new high that we have mentioned as a true breakout fake out. This will be the real showcase move we've been waiting for and it has likely already been ignited by the FOMC announcement we had earlier.
The Euro story has also been similar in terms of price action projections we pitched previously.
Four Hour chart for the Euro, shown previously:
The Following comments were made:
The Euro story is not that different...
Whilst the Dow Jones has been in a 300 point range over the last month the Euro has been in a 400 point range over the past month. This range might sound fine but it's not and simply put it is basic sideways action. The chart below shows more:
Euro Four Hour Chart
The red trend line shows the 400 point range over the past month. From the incline of this red line you can see that the upside hasn't been that exciting and in reference to this a few failure lines have been pitched.
We have a high probability for failure at the intersecting blue counter trend line marked by 'A'.
Another failure region is the top blue line 'B' which may occur but we will find out over the next day or so.
We expect price to move back quickly to the recent yellow breakout line marked by 'X'. When this gives way a sharp move to the base trend line 'Y' will be seen and if snapped a quick route to 132 will be likely.
Although many view the recent action for the Dow and Euro as exciting times as price seems to be moving higher, we view the action as dull range bound movements but over the next few days to a week it seems likely that price action will sparkle to life!! Don't blink or look away from your screens now as the real moves look like igniting soon!
Once again TMS would simply like to warn about sudden dollar rallies which could start to surface in the coming months if not coming weeks and this will rock major markets that are moving in line with the current dollar decline.
The FOMC Rate Decision Price Action Update for the Euro
Euro Four Hour Chart:
You can see from our previous Euro chart that we informed how price would back away from the failure line of A and would touch back to intersecting line X. This did occur however the decline did not deepen and after the FOMC announcement price moved towards are identified failure line B.
Notice how we have now mapped Failure lines B and A in which we have also given them a blue base line. The overall pattern in ZigZag and the whole blue line pattern can be seen as a 'Z'.
We will expect prices to decline and head towards the interesting breakout line X and also rapidly move to complete the 'Z' pattern by of course moving towards the blue base line at around 13850.
The Red base line is the lower end of the range we discussed previously in which the Euro has been trading sideways for around four weeks now. Snapping this will see prices slide significantly towards 132.
Also notice our indicator along the bottom. Not only do our technical projections highlight a fantastic selling opportunity but also the indicator along the bottom is in agreement with the price action and the price action projections above. Both have been marked out by RED Sell Arrows.
We don't want to sound bearish at TMS but markets appear to be sitting at highs when over the past four weeks we have merely seen sideways action. The hype is definitely being given BUT where the hell are all the media crash pundits now? We say if you are on the ball then bring out the contrarian in you and understand risk/reward in reference to what the price is really implying!
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