Debrief · 15 June 2022 · Into the FOMC: all bets are off
My plan into the FOMC. After the aggressive move out of balance on the ECB and CPI, we sit in a 2-day overlapping balance between 3819 and 3708; buyers must protect the spike at 3723, and today technicals guide execution only.
HIGH 3839 | LOW 3720.25 | CLOSE 3789.25 · 24-hour session
The session
Into the FOMCThe aggressive move out of balance that followed last week's ECB and CPI left multiple poorly auctioned areas that may need to be re-auctioned at some point. Hold on to that thought. For that to happen, we will need to see an end to the OTFD. Sellers continue to chase the auction down, which has left us in our current 2-day state of overlapping balance between 3819 and 3708.
The 2-day profileThe 2-day VPOC is now at 3740, and the buying tail left over from yesterday's auction must be monitored carefully. On the profile review I have marked last month's lows, this week's POC and value area, the 2-day profile with its spike at 3723, and the two gaps above.
The monthlyThe auction is now out of balance on the monthly, and the buyers' objective is to end the daily OTFD and bring the auction back inside the prior month's range. It managed to trade back inside on Monday, bar a few TPOs.
Levels into the next session
Monitoring the 2-day profile: H 3819 | L 3708 | VPOC 3740 | VAL 3732 | VAH 3779 | TAIL 3723
Levels marked on the profile review, above and below.
Data and news
FinancialJuice reported:
- Gazprom halts one more compressor, squeezing flows to Europe.
- China's President Xi: China is to support Russia on sovereignty and security.
- ECB's Wunsch: the ECB is very open to stepping in if markets overreact.
- The ECB is to discuss reinvestment of PEPP bonds at the emergency meeting.
- EU Financial Services Commissioner Designate McGuinness: there will be important EU announcements today.
- EU Financial Services Commissioner Designate McGuinness: we ask the UK to come back to the negotiating table.
- Israel and the EU to sign a natural gas export deal on Wednesday (Israel's energy ministry).
The plan
Into the FOMC: all bets are off.
The current two-day action is balanced, so I will monitor the extremes and look for change. It is hard to talk about technicals and auctions when we are so near to possible fundamental shifts in regime from central banks.
Buyers will want to protect the spike at 3723, ahead of the yearly lows at 3708. A failure of buyers to hold on to these crucial levels will be an ominous sign of more to come to the downside, and I will be looking at 3650, an HTF target.
Should we trade and hold above the two-day auction VA at 3779, I will look for the prior month's highs and 3809, and the 2-day highs at 3819, with an intermediate target above at 3857.
On average days I favour technicals over fundamentals, but on major macro events it's the other way around, and technicals are my guides for execution.
Key lessons
Quote of the day
We tend to use [the word transitory] to mean that it won't leave a permanent mark in the form of higher inflation.
Fed Chairman Jerome Powell, speaking to Congress.
Trade well and prosper.
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