You should trade before FOMC meetings!

25 July 2022 200
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The Federal Open Market Committee (FOMC) of the Federal Reserve System holds a new meeting tomorrow at 9:00 pm (MSK), where the decision about an interest rate will be made, the growth of which is predicted to move up by 75 basis points to 2,5%. 

 

Studies of US stocks and indices, oil and gas and precious metals price movement before FOMC meetings reveal the benefit of FOMC “drift” effect predictions. 

It showed that US indices (S&P 500 and DJIA), most of considered US stocks, oil (Brent, WTI), gas and metals (especially silver) are prone to grow 24 hours before the Federal Open Market Committee (FOMC) meetings. Moreover, stronger growth of US stocks and indices is observed 36 hours before FOMC meetings. 


The effect proved itself by the growth of S&P 500 и DJIA indices on May 3-4 and June 14-15 of this year relatively. 

 

Thus, indices S&P 500 and DJIA may be considered as trading instruments as well as US companies’ stocks, which showed the highest average return per trade, total return and acceptable level of drawdown (no more than 20%). Such stocks are Apple, American Express, Visa and JP Morgan, oil WTI and natural gas and silver


 

Let’s focus on silver.

 

Currently the metal is traded at the July 2020 prices level, which is 18,5. In case bulls manage to defend this level of support, in which the FOMC “drift” effect may help, then the growth to the levels of 19,5 and 20,5 is likely to happen, otherwise decrease to the level of 17,5 is more likely. 



 

Possible entry-exit options:

 

Purchase of silver on July 26th at 9:00 pm (MSK)

 

Close a deal:

* Take Profit 1 = 19,5, Take Profit 2 = 20,5.

* Market exit on July 27th at 8:59 pm (MSK).

* Market exit on July 28th at 4:59 am (MSK).

* It’s necessary to put (place) Stop Loss order below the minimum of the previous trading day, which is July 26th.


 

Remember the spread and money management rules!



 

Warning!

Trading on financial markets involves a high level of risk and may lead to the loss of investment capital. The MarketCheese team is not responsible for the possible loss of your investment funds.

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