The “Reaction” Trade We’ve Been Waiting For!

With FOMC behind us, time for “Reaction” Thursday…

The day after the FOMC Announcement is one of my favorite days to trade because we get so many great opportunities…

The Emini and Nasdaq were both bullish into ranges today, and this afternoon’s selloff gives us the perfect opportunity to “snap back” into the range…

Crude Oil is bullish into a range, and I’m excited to “trade the turn” looking for another leg higher tomorrow morning…

I told you to “save your bullets” during today’s FOMC report, and these are the “reaction” trades we’ve been waiting for!

E-Mini S&P (ES):

E-Mini Keys to Success:

Bulls took control this morning into a trading-range ahead of today’s FOMC announcement, which then sent prices racing lower to complete a measured-move breakout.

Sellers have all the momentum right now, but it appears they’re struggling to take it lower, which may give buyers the opportunity to run price higher back into the range (magnet) above them.

Buyers have three options – first, then can wait for a retest of the recent low, then use a 2-try failure to get long into stops. 

Second, they can look for a more aggressive entry with a trap below 4310 off the low of the hidden channel. 

Third, they can wait for a 123-Reversal and buy the first pullback off the channel low.

Sellers have a difficult job right now – they’re sitting right at major lows, so they need a strong breakout lower that gives them an entry before the major lows at 4212.

E-Mini Nasdaq (NQ):

Nasdaq Keys to Success:

Just the Emini, the Nasdaq ran higher into a range this morning, only to crash back down after the FOMC Announcement into a new trading-range this afternoon.

Sellers have control of momentum, but they don’t have many options right now unless we get a strong breakout going lower.

Buyers have plenty of options – they can buy a seller failure off support below this recent range, and they can trade a 123-Reversal going back into the range above them.

Crude Oil Futures (CL):

Crude Oil Keys to Success:

Bulls took control on Crude Oil this morning with a strong 3-legged move into a trading-range before the FOMC Announcement sent price lower.

Buyers still have control, and they’re trying to complete a pendulum-swing rotation back through the highs.

Buyers have plenty of options right now – they can use this falling resistance trend-line in combination with the 2-try failure to buy into stops of sellers…

Buyers can also “trade the turn” using a new channel going higher, or they can wait for a pendulum-swing breakout and use today’s high for a breakout on the way up to $90.

Sellers need to stay patient – they can take control of this market with another leg lower (123-Reversal) and look for a short off the high of a new bear channel on the way back to $85.