Analyzing Market Trends and FED Interest Rate Decisions "SPX"The daily chart above highlights FED interest rate cut decisions with vertical lines. I've used the DJI ticker instead of SPX, as it provides a more comprehensive representation of the overall market, unaffected by the dominance of the Magnificent Seven.
My analysis focuses on monthly candle peaks (indicating overbought conditions) and lows (indicating oversold conditions), as well as direction reversals. This cycle repeats, forming higher highs and higher lows. By identifying these patterns, we can determine the market direction, which is either trending upward (green) or downward (red).
Now we know the direction where the market is heading. Its either trending to form a new higher high OR new higher low.
With that understanding, when we plot vertical lines on FED decision days, the direction has not changed. HOWEVER, the decision is accelerating the market direction to its targeted price(either higher high or higher low).
The above guidance is for swing traders for a duration of about 2/3 weeks. Intraday traders can benefit this by looking at days high and low before decision announcement and knowing where the market is generally headed.
As a trader, I utilize custom-built screener tables that cascade data across multiple timeframes and stocks/sectors. This unique approach provides a fascinating big-picture perspective, highlighting strong stocks and sectors.
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Happy Trading!!
