U.S. markets ended the last trading day of February in the red as investors and traders remained concerned about the Federal Reserve's future policy path. Markets pared gains made in January as strong economic data coupled with a tight labor market raised concerns the central bank may remain on its rate hike path for longer than expected.
Traders have started to price in the chances of a bigger 50 basis-point rate hike in March, although the odds remain low at about 23%, according to Fed fund futures, which suggest rates peaking at 5.4% by September, up from 4.57% now. BofA Global Research cautioned the Fed could even hike interest rates to nearly 6%.
The SPDR S&P 500 ETF Trust (NYSE:SPY) closed 0.37% lower on Tuesday while the Invesco QQQ Trust Series 1 (NASDAQ:QQQ) lost 0.13%.
Choppy, chop, chop
1st call entry with SPX with 14% gain
2nd SPY call with only 4.5% profit
Final SPY put trade fetching 12%
Federal Reserve Bank of Chicago President Austan Goolsbee reportedly said central bankers must avoid putting too much weight on financial markets and should focus on what they learn from incoming data.
This was Goolsbee's first speech since he took office last month. In his remarks prepared for an event at Ivy Tech Community College in Indiana, Goolsbee it is a danger and a mistake for policymakers to rely too heavily on market reactions.
"Our job is ultimately judged by what happens in the real economy," he said according to a Bloomberg report.
Goolsbee also observed data that bounces around can make it difficult to see what's going on in the economy.
"So, it's important to supplement these traditional data with observations on the ground from the real economy," he said, adding that this is especially true when things are as strange and up in the air as they have been through much of the pandemic times.”
Beware of false breakouts trading a channel
One of the most common patterns of price trend continuation is the Flag pattern. How to identify this pattern? How to use it in trading most effectively?
Flag pattern breakout and retest
The Flag pattern is a type of price pattern in bullish trends. This pattern consists of a strong increase (called a flagpole), followed by a countertrend with two levels of resistance and support (called flags). The price forms this pattern after a strong increase. It then breaks out of the resistance and continues rising, marking the end of the pattern. This is a very common behavior of prices during an uptrend.
After breaking out of the resistance, the price can retest this new support. Retest is the process of retesting a price zone that the price has broken before.
The price breaks out of the resistance and rises. Then, it often tends to fall back slightly to retest the recently broken resistance level. Enter a trade at this point could bring the best reward upon uptrend confirmation. However, a stop loss below the new found support would minimise the risk as well.
Resistance turns support after retest
Trading Tips: Trend is our friend when trading a channel. Be patient and wait for a retest to avoid getting trapped before a breakout. Price should swing between 394 and 398 on Wednesday before a bigger move coming up. Trade safe with a stop loss 😉
If you find the information useful, I'd appreciate if you could click on Like, Comment & Repost this article at the bottom right corner.
Follow me for more trading ideas & strategies to ride the market daily with profits! 🤑
@TigerStars
@CaptainTiger
@MillionaireTiger
@Daily_Discussion
@Tiger_SG
@TigerPM
Comments