Today is a special day in the market, some traders even refer to it as the “Super Bowl” of trading sessions. Today is the day of another FOMC meeting where the Fed is set to make their latest announcement on what it plans to do in regards to interest rates. They refer to it as the Super Bowl because of the wild moves you sometimes get after Fed Chair Powell speaks.
These can be up days or these announcements can send the market spiraling to the depths of Davie Jones’ locker, it’s difficult to tell. We as retail traders have absolutely no control of where the market goes on days like today, so it is often best to sit out until the dust settles or at least, be hyper focused on risk management so you don’t blow your account.
However, if there was one trade we would have on our screens today, it would be the trade setup being given to us by Micron Technology (MU). In a vacuum, without the FOMC meeting looming heavily over the market, this would be a trade to the upside off the 70 mark. This level has acted like support a few times in the past, so we can look at it as a key level now.
The level we want to see MU overcome is right around 72, from there, we can then test our 52-week high of 75 and above. This is, again, ignoring the fact that FOMC is today.
Since there is a volatility event such as this Fed announcement, there’s no real telling what this will mean for MU. To say it will have no effect may be a bit too foolish. For now, the best plan of attack is to keep this trade on your watchlist until after the dust settles.
This is the case because of two reasons, and a third scenario that would actually work out in our favor. In the off chance the market doesn’t react very much to the announcement, that would be best case scenario for us, as the trade would still be valid. However, the two other scenarios could invalidate this trade rather quickly.
If we have a massive move up, we miss this setup, but we keep our capital. Remember, cash is a position. If we have a massive move down, our levels are reset and we need to look for other support and resistance levels. This is why it is key to understand your risk ahead of an event like this so you can better position yourself for the possible outcomes.
Patience on days like today are critical. It can be the difference between a blown account and living to trade another day. The days following an announcement like today will often be an established trend, so this is another thing to consider. Trading is a fatiguing thing to do, you do not need to trade everyday. Keep this in mind…
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