Trading Plan for the days action 5/05/22

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Refer to charts for comments on expected price action. Charts Marked with anticipated entry setups in YELLOW and ideal setup in GREEN.

US indexes ramped higher after the Fed raised rates by 0.50% and indicated they were ready to do the same in upcoming meetings. Powell ruled out a 0.75% raise which seemed to give the market some comfort that the Fed will not be overly aggressive in containing inflation and potentially tip the economy into recession. It seems that there were many piled in on the short side who were quickly squeezed out of the action. It seems that the rally may be an over reaction although the USD also fell off recent highs.

BOE interest rate release out at 9pm AEST – Expecting a lift from 0.75% to 1.00%

The SPI200/ASX200 were both initially under pressure until it was saved by the Fed and DOW rally. Prices spiked to clear out any sellers and flushed into resistance. I expect that the ASX will opening stronger but the move up may need to correct a little prior to any further move up. The DOW chop around 33165 nows makes sense after the ramp higher on the rate hike. Price was again contained around the 33165 from the start of the session and then pushed up into 34118. Expect that price is extended but may look to flush the level before some profit taking pushes price lower. Hang Seng held the 20690 level and reversed the days session lower with a rally back up into 21190. Expecting that the 21190 level will be flushed and then will be watching for a lower high and squeeze down. If we see an initial flush lower on the open, then we may expect the 21190 level to be broken later in the session. The Nikkei has a bank holiday today so no trading for me.

Cryptos found some more love after the FOMC announcement and both Bitcoin and Ethereum rallied up through resistance. Bitcoin spiked up through 39150 but is in no mans land for me so I would like to see a higher low hold that may send price up into 40280 highs. Ethereum spiked a little harder but I will also be looking for a higher low to hold prior to any further rally.

Spot Gold reacted to the USD selloff and rallied up through 1875 off support around 1861. If bulls can hold another higher low then I expect to see a move into 1893 and potentially higher.

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SPI200 Index