NQ: Two Possible Paths for a FOMC Day

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$NQ #macro #trading setup

Tomorrow we have a very strong catalyst for the market, first FOMC will announce its decision about another rate hike, and, second, the Chairman Jerome Powell will share his intentions about further rate hikes for the year at 2-30 PM EST.

NQ, Daily chart

I consider the move up off the October 2022 low as a corrective (w) up, (x) down, (y) up pullback that will eventually be followed by another leg down targeting the Green Box.

So far that corrective bounce has been really flat. That means that (i) the low made by wave (x) stopped near the starting point of the first leg up labelled (w) and (ii) the top of the second leg down has been unable to break over the top of the first leg up.

Flat corrective pullbacks is a sign of bulls’ weakness.

Note that NQ stopped at the declining 200 MA (pink line) and the lower red trend line that connects several previous highs. In addition, 12,270 is the strong 50% retracement. If bulls manage to push NQ over 12,270 they will be able to get deep inside that Red Box.

Let’s zoom in to 240 min chart to be able to see the details of the microstructure of the second leg up in wave (y) up:

NQ 240 min chart

⚠️As I noted several times before, bears made enough waves to consider subwave (y) having topped. That means that bears can start that new leg down to new lower lows. To confirm that bearish scenario they need to push NQ under the immediate support 11,604.

However, as long as bulls hold NQ over 11,604, the immediate support, they keep alive a bullish scenario where they can push higher one more time in an a-b-c up structure. On the way to the upper Red Box the main resistance is 12,275 (50% retracement).

Because FOMC days normally produce enormous intraday volatility I can see a more complicated scenario shown below:

NQ 240 min chart

I really like that scenario because the move up today looked like a corrective bounce in a micro subwave b up.

⚠️If we get a spike under 11,600 tomorrow that would confirm that NQ has most likely topped in the whole (w)-(x)-(y) up structure of wave B up and that will make it highly unlikely that push higher to 12,600+.

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