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Chart of the Day Update: S&P 500 and Swissy Ahead Of The FOMC

S&P 500 and Swissy Ahead Of The FOMC

Short Usd/Chf off a Long S&P move.

A January 1.0300 Put may do the job, if the FOMC play ball.

The global markets traded higher in the European session on the day that the FED will announce their rate decision. The German Dax gained more than 80 points and was a major reason for the recent short Usd moves against the majors. Overall, the pound was the strongest today as the Gbp/Usd pair reached the 1.6375 resistance area from 9th of December.

The S&P futures traded higher, with current prices around the 1116 resistance zone, after a bounce from the 1105 low that was reached yesterday in the last moments of the Wall Street trade.

The markets moved heavily in the first part of the European session, especially when considering the importance placed on the reaction to to upcoming Federal funds rate announcement at 14:15 EST, that are expected to remain unchanged at 0.25%.

Over the past two weeks the Usd has made good ground against the majors, on speculation that the Federal Reserve will raise rates earlier than some had initially thought.  If the FOMC do not raise rates today (and history shows that December is not a month that that happens), then Usd may trade lower, and in this case the S&P 500 may easily break through into the new yearly highs. (History also shows that the dollar loses ground virtually every year over the last 15 years in December, following equity trade that historically gains the most all year in the upcoming six week period, Schwartz Stock Market Handbook).

 TheLFB Charting: S&P 500 4h view

On the chart above we can see that the S&P 500 (cash market) is trapped between 1083 support and the 1118 resistance area. If the resistance is broken after the FOMC decision then a new 1130 target will be in play, which should drive the Usd into a pull-back against the rally seen over the last two weeks.  

TheLFB Elliott wave team will look for a technical move lower on the Usd/Chf pair into a Short red wave ii), since wave i) may hit the top around Fibonacci extensions levels measured off both the wave i and wave ii distances.  If this follows through we can expect a pull-back in a Short wave ii) that could easily trade down, towards the 1.0200 zone over the coming days.

 TheLFB Charting: Usd/Chf 4h Elliott Wave view


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Disclosure: Short dollar