Hopes of Rate cut? Double Bottom in Stochastics, support by opening price, --> Long --> $1540 profits
5 min Emini Nasdaq 100
Hi,
How's it going? Market gapped up today and never did close below the opening price at any one time... This is very strong price action... If you observed carefully, price is being supported by the opening price... But it hit resistance at the cyan moving average at around 11:00 am... I did not enter the market then..
My chance only came when Stochastics started to turn up from the oversold regions in a double bottom fashion. This is a very rare pattern.. and the risk/reward seems great in this trade, being supported by the high of the opening bar. I longed 1 contract at 1927 and another 2 more contracts at 1938...
Short-term MACD crossed the signal shortly after I entered, confirm the direction of trade.. I held my position all the way till the end and exited at 1960.. notice how Short-term MACD crossed back under the signal line? I made profits of $1540.
Fundamentals:
>Many investors believe the Federal Reserve will cut interest rates at its next meeting on Sept. 18 or even sooner and were preparing for Fed Chairman Ben Bernanke to hint at such a move on Friday at a speech in Jackson Hole, Wyo. The possibility of a rate cut has given Wall Street some hope that the stock market will recover from its summer volatility, and that right now, it's a good strategy to buy while the buying is cheap.
News that Bernanke said in a letter to Sen. Charles Schumer, D-N.Y., that Fed policymakers are "prepared to act as needed" if the market's turbulence hurts the economy helped pad the market's gain.
The Fed, although it has not yet indicated that it will indeed lower the benchmark fed funds rate, has been adding cash to the banking system in an attempt to keep the credit markets liquid. The Federal Reserve Bank of New York said Wednesday it would inject $5.25 billion through a one-day repurchase agreement, where it buys that amount in collateral from dealers who then deposit the money into commercial banks.